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GUS201- Financial Accounting ter 7 - Internal Control Class Exercise Nathan Jacobs has worked for Carlson Associates for several years. Nathan demonstrates a loyalty that is rare among employees. He hasnt taken a vacation in the last three years. One of Nathans primary duties at the practice is to open the mail and list the checks received He also takes cash from customers as they leave their appointment. At times it is so hectic that Nathan doesnt bother with giving clients a receipt for the cash paid on their accounts. e assures them he will see to it that they receive the proper credit. When the traffic is slow in the office Nathan offers to help Joan post the payments to the patients accounts receivable. She is always happy to receive his help, because he is a very conscientious worker Instructions: Identify any of the following principles of internal control that may be violated in this office situation. a. b. c. Establishment of responsibility Segregation of duties Physical control devices d. Documentation procedures e. Independent internal verification f. Human resource controls
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Answer #1

Nathan does many a jobs and help many a employees, so in this process Nathan violates many a internal control principles like

a. Establishment of responsibility: The ear marking of the responsibility to do a job can not be done. So, Nathan’s actions disturbs the responsibility establishments.

b. Segregation of duties : The separation of the duties between the employees would become difficult when employee like Nathan do such kind of activities.

c. Physical control devices : It would be difficult to know under whose control the physical devices are when Nathan works mixing with other employees.

d. Documentation procedures: The documentary procedures of all job activities disturbs where Nathan signs in its personal capacity, so documentation gets disturbs.

e. Independent internal verification : The verification of the employee capability could not be accessed if Nathan works helping others.

f. Human resource controls : It is good that Nathan does jobs at many a places helping others, but control by the human resource department of employee would got lag when they find Nathan not at its designated post.

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