Byp 8-5 Assignment

August 1, 2012

Mr. Jerry Mays

Manhattan Company

1001 Wall Street

New York, New York 10000

Dear Mr. Mays,

Recently I was assigned by my firm Croix, Marais, and Kale to audit the internal controls utilized by your employees when recording mail cash receipts. This additional audit is a result of errors being noted in earlier reporting and money missing. The following is a result of that review along with some key recommendations for improvement to the system now in place.

Initial findings showed although checks are immediately endorsed as cash only, no list of the checks could be found. There is also no one designated employee for this task. Our recommendation is to have the list prepared while the checks are being endorsed by the employee who is responsible for opening the mail and not anyone else. This employee is often identified as the mail receipt clerk. Details should include: the name of the check issuer, payment purpose, and the amount of the check. The mail receipt clerk should sign the list to confirm they have met their responsibility for preparing it. An original copy of the list, along with the checks and remittance advises should then be submitted to the cashier's department. We also recommend that the cashier then add the checks to the over-the-counter-receipts, and prepare a daily cash summary as checks should be noted as cash. A copy of the check list should also be forwarded to the treasurer's office by the mail receipt clerk for comparison with the total mail receipts shown on the daily cash summary. This copy will ensure that all mail receipts have been included in the summary.

The audit also revealed that deposits are being made on a weekly instead of a daily basis. We strongly recommend that deposits be made on a daily basis. Other recommendations for your consideration are:

1) Bond employees who handle cash or checks. This will safeguard your company from internal theft or embezzlement. The insurance company will carefully screen each applicant before adding them to the policy and also vigorously prosecute offenders.

2) Rotate employee duties and require employees to take vacations. This will hinder any effort by an employee to attempt theft as discrepancies are usually discovered when they are on vacation.

3) Conduct thorough background checks. Make sure your HR Coordinator is confirming that the candidate graduated from the schools they listed and that they contact any previous employer or reference by looking up the telephone numbers themselves and not using the ones provided.

Please feel free to contact me with any further questions or concerns that you may have. I am also willing to provide any additional training or resources