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Up and At Them is a training organization. It invoices customers when it provides training information and courses rather than collecting cash when services are provided. The responsibility for revenue and receivables is separated between three clerks as follows: A clerk responsible for the sale of training information, A clerk responsible for registration for training courses and A clerk responsible for donations received from benefactors. The 3 clerks report to an office manager who reports to the managing director. The office manager prepares regular accounting information from the integrated computer accounting system. When the mail arrives each morning the office manager opens and sorts the mail. Each clerk is then given the receipts that relate to their responsibilities. They prepare a batch total and enter the details into the computer accounting system. At 3pm a deposit list is printed from the integrated accounting system and one of the clerks takes the all the receipts and the deposit list to the bank. The office manager approves bad debt write-offs. The managing director considers all the employees to be trustworthy but a number of factors have caused her to want to conduct an internal audit: She has heard that internal controls are very important. Sales have been low compared to previous periods. She needs to employ a temporary staff member to fill in for one of the clerks while on maternity leave. The managing director asks you to review the internal controls over sales and donations to provide suggestions for improvement.

Required: 1. List the weaknesses that are apparent in the current processes. (5 Marks)

2. Explain how processes may be changed so that controls provide reasonable assurance that cash receipts are accurately recorded. (10 Marks)

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