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Scenario $1$: Handling the VP$\text{'}$s Request

The AP clerk should not prepare the check without proper disclosure, as this raises concerns about internal control violations like bypassing standard procedures. Internal controls are designed to ensure transparency, prevent fraud, and enforce checks and balances. The instruction to withhold information from a supervisor is a red flag. The clerk should inform her immediate supervisor or another higher authority. Adhering to ethical practices and control systems ensures accountability and mitigates risks of financial misconduct.

Scenario $2$: "Plugging" the Bank Reconciliation

Instructing an employee to $$plug$$ the difference in a bank reconciliation and record it under Miscellaneous Expense undermines internal controls. This practice could hide errors or even fraud, and leads to inaccurate financial records. Proper reconciliation is crucial for identifying discrepancies between bank records and company ledgers. Encouraging unsupported entries compromises the reliability of the company$$s financial reporting and violates internal control principles like accuracy, completeness, and transparency.

Scenario $3$: Delayed Deposit Clearance

A deposit that clears the bank two weeks after its recorded date is a concern, as it could indicate operational inefficiencies, banking errors, or potential fraud. Internal controls should include monitoring such anomalies to ensure that deposits are processed promptly. Delayed clearance may disrupt cash flow and should be investigated to understand the cause and prevent future issues. This is especially relevant if delayed deposits become a trend or involve large sums.

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