Change in process 2899

  • Hi,
    I just want to consult on how things should be done when there is a change in the personnel performing the job. For example, our CFO has resigned and transferred her function to the acctg manager. They then hire an accountant to do the previous function of acctg manager. This happened within the year. In testing of the operating effectiveness of the controls, should I get samples only on the period after the change?
    What should be done when problems occurred during the transition period? For example, the control should be - the accountant (previously the acctg manager), will enter the journal and the acctg manager (previously CFO) will post the journal. Due to the change, the acctg manager did the entry and posting of journals for the reason that the nobody is capable of doing the same function.
    Need your advise. Im quite confuse with the situation we are now in. The external auditor is not helping as well. And we will be subjected to external audit soon. have not started the testing due to these confusion.

  • You will need to test the entire YTD activity, but you may want to skew your sample selection to the time period after the change in personnel.
    There is a segregation of duties deficiency if the same person was creating and posting JEs without additional review. You will need to determine an alternate person to review the entries as a mitigating control.
    In a small accounting shop, there are likely to be SOD conflicts such as this. The key is to ensure that there are higher level controls to review the financials to ensure that errors or fraud risk is minimized.

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