Dear Mr. Mays
RE: INDENTIFICATION OF WEAKNESSES IN INTERNAL CONTROLS
As your newly appointed auditors, Croix, Marais, and Kale ("CMK" or "we") are mandated by the scope of our contract to review the internal controls over mail cash receipts (the "process") of Manhattan Company (the "Company"). As part of the review, we will also provide some recommendations for improving any identified weaknesses in the internal control system of the Company. The review of the process identified the following, which we will classify as weaknesses in the internal control of the system:
* Although checks are promptly endorsed "For Deposit Only", no list of the checks is prepared by the person opening the mail; * Mail is opened by the cashier or by the employee who maintains the accounts receivable records; and * Mail receipts are deposited in the bank weekly by the cashier For each of the aforementioned, we will provide an explanation of the weakness as well as our recommendations for improvement. The checks endorsed, as “For Deposit Only” is a very good internal control mechanism. The endorsement is restrictive and reduces the likelihood that someone could divert the check for personal use, as banks will not give individual cash when presented with a check that has this type of...