Accounting

The Case of Internal Controls in X Company and Ms. Smith 

On a warm summer day in early July 2011, Ms. Smith of the executive  team of X Company sat in her office preparing a request form for routine  travel expense reimbursement. She attached documentation in support of  the cost of the air travel portion of her planned trip, which she had  booked recently and reserved using her personal credit card. The  organization where Ms. Smith worked did not have a corporate travel  account.

After signing the form, Ms. Smith walked to the office of the chief  financial officer (CFO) to ask for his approval of the requested  reimbursement. The CFO, who knew Ms. Smith well and had worked with her  at a previous company, engaged in social conversation. He quickly  glanced at the documents, not bothering to inspect them or review the  total cost of the trip, since he trusted in Ms. Smith's credibility. The  CFO initialed the form and gave it back to Ms. Smith, who then went to  see Alex, the Accounts Payable clerk with whom she had also worked at  the prior company. She wanted Alex to immediately process her travel  expense reimbursement request and approve a wire transfer of $6,250 into  her personal bank account. Alex was only too happy to assist her with  what he must have considered a routine task. He was busy with other  tasks and did not take the opportunity to review the details connected  with the travel expense reimbursement request. Alex immediately  initiated the wire transfer, filed the documents into Ms. Smith's folder  for her trip, and then moved on to the rest of his busy day. Upon  returning from her trip, Ms. Smith did not file a reconciling expense  form with attached receipts of her trip.

Required: Discuss in detail at least three missing  internal controls, the reasons why these controls are important, and a  remedy in the case of X Company and Ms. Smith.

Your well-written paper must be 2-3 pages, in addition to title and  reference pages. The paper should be formatted according to the CSU-Global Guide to Writing and APA Requirements. Cite at least two peer-reviewed sources, in addition to the required reading for the module.