Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Case Study CS-1 LO 12 M & G Finances (M& G) is an incorporated tax preparation company
Case Study CS-1 LO 12 M & G Finances (M& G) is an incorporated tax preparation company. Most of its clients pay for the completion of their tax returns with either a debit or a credit card. The rest pay with cash. M&G employs 20 tax preparers, two supervisors and one manager. The office collects thousands of dollars in cash every day. After a tax return is prepared by one of the 20 tax preparers , a supervisor is responsible for recording Information (e. customer name, amount charged, payment method) related to the return in a log. The receipt of cash is recorded immediately when it is received. Receipts are issued immediately. In numerical order. Copies of the receipts are also kept with the logs. The cash is kept in the drawer of the employee who prepared the tax return. At the end of the day, the cash being kept by the various employees is pooled together and then passed on to the supervisor, who keeps it in her drawer. The cash is deposited into the bank at the end of each work week. Over the past few weeks, the manager has noted that the amount of cash on hand in the office has consistently been less than the amount recorded in the logs. In fact, the difference between the actual cash on hand and the recorded amount is increasing little by little over time. Required a) Is M&G exhibiting any positive aspects in its system of cash controls? Explain. b) What are the negatives in M&G's cash control system? Explain. (You can refer to controls that do not exist or controls that exist but are ineffective).
4 5 Parta - Is M&G exhibiting any positive aspects in its system of cash controls? 6 7 8 9 10 Parta - Explain. 11 12 13 14 15 Part b - What are the negatives in M & G's cash control system? 16 17 18 19 20 21 Part b-Explain. 22 23 24 25 26 27 Partc - Provide 3 suggestions for this company to improve their cash management system. 28 29 30 31 32 33
Case Study CS-1 LO 12 M & G Finances (M&G) is an incorporated tax preparation company. Most of its clients pay for the completion of their tax returns with either a debit or a credit card. The rest pay with cash. M&G employs 20 tax preparers, two supervisors and one manager. The office collects thousands of dollars in cash every day. After a tax return is prepared by one of the 20 tax preparers, a supervisor is responsible for recording Information (e. customer name, amount charged, payment method) related to the return in a log. The receipt of cash is recorded immediately when it is received. Receipts are issued immediately. In numerical order. Copies of the receipts are also kept with the logs. The cash is kept in the drawer of the employee who prepared the tax return. At the end of the day, the cash being kept by the various employees is pooled together and then passed on to the supervisor, who keeps it in her drawer. The cash is deposited into the bank at the end of each work week. Over the past few weeks, the manager has noted that the amount of cash on hand in the office has consistently been less than the amount recorded in the logs. In fact, the difference between the actual cash on hand and the recorded amount is increasing little by little over time. Required a) Is M&G exhibiting any positive aspects in its system of cash controls? Explain. che b) What are the negatives in M&G's cash control system? Explain. (You can refer to controls that do not exist or controls that exist but are ineffective).
4 5 Parta - Is M & G exhibiting any positive aspects in its system of cash controls? 6 8 9 10 Parta - Explain. 11 12 13 14 15 Part b - What are the negatives in M & G's cash control system? 16 17 18 19 20 21 Part b-Explain. 22 23 24 25 26 27 Part c-Provide 3 suggestions for this company to improve their cash management system.
PART a
As there is a continuous increase in the difference between actual cash and cash recorded, it shows there is misuse of the cash by employees. So M&G is not exhibiting any positive aspects in its cash control.
Part b
Negatives in M&G cash control system
1 ) From the information given in the case study it is clear that M&G is dealing in huge cash receipts then there should be proper internal control in accounting and receipts of cash.
2) As all the tax preparers are collecting the cash of their respective return prepared there is even more difficulty in identifying who had misused the cash.
3) Also when there is cash receipts involved it is a good practice to reconcile at the end of the day and deposit the amount in the bank every single day,but M&G is not following the process.
Part C
Sujjestions to the company
In the given system there are too many people handling the cash like tax return preparers,supervisers.The amount should be collected by a cashier and receipt should be issued by a different person and the supervisor should verify the accountability and the tax return preparers should be given a log of how many returns prepared and the amount should have been collected and at the end of the day all the log from tax return preparers should be collected and and the amount to be consolidated and reconciled with actual cash collected and if tallied should immediately transfer the amount to the bank.Only then there would be an accountability and proper control of cash.
