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#111560 - 09/03/03 02:11 PM Vulnerabilities - General Ledger
Risk Officer Offline
100 Club
Joined: Apr 2001
Posts: 205
I am currently working on a risk assessment for the Accounting Department. What would you consider to be the most significant exposures and vulnerabilities relating to general ledger?
My opinions are just opinions.

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#111561 - 09/03/03 04:05 PM Re: Vulnerabilities - General Ledger
wlavoie Offline
Gold Star
Joined: Jul 2002
Posts: 338
Hell's Canyon
I still consider myself a newbie but this came to mind...
In a small bank there is a lot of risk in segregation of duties. Who can make entries and can that person reconcile the account? Especially with a bank there is the due to/from bank accounts that have many entries as well as $$. Accounts that are not often used are a potential source of fraud. There are usually enough people looking at accounts for reasonableness, yet it is a materiality issue. Is a few thousand going to look unreasonable in an account that carries large amounts? There is also the issue of timely reconciliations; you may not find the problem if you don't look at the account for 3 months.
Wendy LaVoie

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#111562 - 09/04/03 02:32 PM Re: Vulnerabilities - General Ledger
NancyF Offline
100 Club
Joined: Dec 2001
Posts: 173

Also, how about UNrecorded entries, particularly liabilities.

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#111563 - 09/04/03 06:17 PM Re: Vulnerabilities - General Ledger
LiL Bit Moore Offline
Platinum Poster
LiL Bit Moore
Joined: Nov 2002
Posts: 624
The following are findings which I have identified when investigating fraudulent activity that enabled the "perp" with the crime, or that have contributed to significant losses incurred:

1. Lack of segregation between entry processing, approval, and reconciliation.
2. Lack of monitoring/secondary review of reconcilation or outstanding items by a knowledgeable supervisor.
3. Lack of proper or adequate training of responsible employees impairing their ability to recognize suspicious activity or entries.
4. Lack of monitoring process to ensure all balance sheet accounts are properly and timely reconciled and are subject to review.
5. Lack of established controls to ensure all entries to income/expense accounts are properly approved and supported by valid documetation.
AND finally -
6. Lack of written policy and/or procedures for certain accounts (such as Due From/OREO/Fixed Assets/Prepaids) to ensure entries are processed in accordance with GAAP and outstanding items are handled accordingly.

An error is not a mistake until you refuse to correct it

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