The Following Procedures Are Used by Kurtz Renovations in Handling

Essay

The following procedures are used by Kurtz Renovations in handling cash payments. The individuals involved in the cheque preparation and payment process are Howie, the Accounts Payable clerk, who reports to the Controller, and Jane, the Construction Manager.
1. When purchase invoices are received, Jane approves them for payment. After they are approved, Howie records the purchase invoices in the Accounts Payable subledger and then files them in an "unpaid invoices" file. Once or twice a week, Howie scans through the file and decides which invoices should be paid.
2. Howie prepares the cheques manually. He enters cheque numbers on the cheques which are not pre-numbered.
3. The unsigned cheques are put into Jane's In Box to be signed.
4. Jane does not feel she needs to see the invoices again when she signs the cheques so only the cheques are given to her.
5. Jane is often out of the office on construction projects, but she tries to make sure that she signs the cheques within two or three days.
6. After she has signed the cheques, Jane returns them to Howie for mailing. After Howie has mailed the cheques, he files the paid invoices in the vendor invoice files.
Instructions
For each procedure, describe what could go wrong as a result of the weakness described, and recommend an internal control to correct the weakness.