The management of U is reviewing internal controls throughout the company. It has noted the following:-
In the trade receivables section, journal adjustments are made by the clerks, without any reference to their supervisor. Journal adjustments may relate to sales returns, discounts allowed, or transfers between accounts.
A. It is acceptable for clerks in the trade receivables section to make journal adjustments without authorisation provided the amounts involved are not material to U's financial statements.
B. It is acceptable for clerks in the trade receivable section to make journal adjustments without authorisation, provided they have no access to cash receipts.
C. Clerks making journal adjustments without reference to their supervisor is evidence of inadequate separation of duties.
Ans C
Would you agree?
