Threats

 Handling cash/checks and posting remittances to customer accounts. -

lapping

(A person performing both of these duties could commit the special type of
embezzlement called lapping.

 Handling cash/checks and authorizing credit memos. -theft of costumer

payments

(A person performing both of these duties could conceal theft of customer payments
by creating a credit memo equal to the amount stolen. The theft is concealed
because the credit memo reduces the customer’s balance by the amount stolen, so
the customer is unlikely to notice and complain.)

 Handling cash/checks and -reconciling bank statements. -theft of cash

(The employee performing the bank reconciliation could record miscellaneous bank
fees equal to the amount of cash stolen.)

Control

 Only the remittance data should be sent to the accounts receivable

department, with customer payments being sent to the cashier.

(First, the total credits to accounts receivable recorded by the accounting department
should equal the total debit to cash representing the amount deposited by the
cashier. Second, the copy of the remittance list sent to the internal audit department
can be compared with the validated deposit slips and bank statements to verify that
all checks the organization received were deposited. Finally, the monthly statements
mailed to customers provide another layer of control because customers would
notice the failure to properly credit their accounts for payments remitted.)

 Implement strict procedures or automation to ensure that remittance data

is routed exclusively to the accounts receivable department while
customer payments are directed to the cashier.

 Reconciliation of the bank account statement with the balance of cash

recorded in the company’s information system.

(An important detective control is reconciliation of the bank account statement with
the balance of cash recorded in the company’s information system. Having this
reconciliation performed by someone who does not have access to cash or customer
remittances provides an independent check on the cashier and prevents
manipulation of the bank statement to conceal the theft of cash.)