The following control procedures are used in Kelton Company for over-the-counter cash receipts. (a) For each procedure, explain the weakness in…
The following control procedures are used in Kelton Company for over-the-counter cash receipts.
(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated.
Procedure
|
Weakness
|
Principle Violated
|
||||
1. | Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. | |||||
2. | All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer. | |||||
3. | To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank. | |||||
4. | At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total. | |||||
5. | The company accountant makes the bank deposit and then records the day’s receipts. |