Question

Some restaurants use customer checks with pre-numbered sequence codes. Each food server uses these checks to write up customer orders. Food servers are told not to destroy any customer checks; if a mistake is made, they are to void that check and write a new one. All voided checks are to be turned in to the manager daily. How does this policy help the restaurant control cash receipts? Do you think there is a more efficient way to control cash receipts? Explain.

Post

Some may find the fact that the per employee losses from fraud in the smallest business are 100 times greater than those at their largest counterparts a bit shocking. Unfortunately, I don’t find it that hard to believe. Segregation of duties in a business is one of the most important internal controls a company can have. In general, segregation of duties serves two key purposes; assurance that a business is able to review and catch errors easily if there is an oversight, and to prevents theft and fraud (Complete Controller, 2018). This control allows businesses to effectively prohibit the allocation of responsibilities to one person. No business wants a payroll employee signing off on their own checks, nor do they want the bookkeeper reconciling their own work. When a company separates the duties, they allow three main functions to stay segregated; custody of assets, authorized use of assets, and keeping records of assets (Complete Controller, 2018). This sounds somewhat simple, but in small businesses this is hard to achieve due to the smaller amount of employees. Small businesses may have to find other ways to prevent and detect fraud.

Required

Agree with the above by building upon their ideas or challenge their ideas and provide reasoning for the disagreement.

Answer 1

Effective Supervision and Independent checks

In very small businesss,the owner-manager may find it necessary to supervise quite extensively.

The fact that all documents are prenumbered provides a means for accounting for their use and for detecting unrecorded transactions. Thus a missing check indicates a meal for which a customer did not pay. since each server has his or her own set of checks, it is easy to identify which server was responsible for that customer.

This Policy may help to deter theft like serving related persons (means favouring) whom they not require them to pay for the meal, or pocketing the customer's payment and destroying the check etc. because a reconciliation of all checks will reveal that one or more missing ones.