(a) Shortcomings
There is no apparent check to ensure that expenditure is for genuine business purposes or that the money has actually been spent.
There is no apparent review to prevent fraudulent collusion between the assistant accountant and salesmen.
There is no apparent check by the directors on expense forms when cheques are being signed.
There are no formal authorisation procedures in place (no evidence of signature).

Suggested improvements
Each salesman should complete a weekly log showing visits made and mileage covered.
These should be checked and signed by the sales director and submitted to the assistant accountant with the expense claims.
Periodically, a member of the accounts staff should check that claimed mileage is consistent with the mileage shown on the cars.
The assistant accountant should ensure that fuel claims appear reasonable in relation to mileage covered.
The assistant accountant should ensure that accommodation and meals expenditure appears reasonable in relation to clients visited and that invoices attached are in fact receipts (i.e., the invoices have been paid).
Entertainment expenses should be pre-authorised in principle by the sales director.
The assistant accountant should check that entertainment expenses are reasonable and were pre-authorised by the sales director.
The assistant accountant should sign each claim as authorised.
Complete and authorised documentation should be presented to the directors with the cheques for signature. Once each cheque has been signed, the directors should mark each claim as paid.

(b) Tests of control
Select a sample of payments and agree them to supporting claims.
Verify that each claim:

• is properly supported by vouchers;
• has been authorised (signed) by the assistant accountant; and
• was marked as paid by the directors.
  Review the supporting weekly log for evidence of authorisation by the sales director.
  Check that any entertainment expenses on the claims were pre-authorised by the sales director and relate to clients visited that week.
  Examine the returned cheques for the sample chosen and verify that they were:
• made out to the salesman concerned; and
• properly signed.