Question

3. For each occurrence below identify the policy(ies), practice(s), or procedure(s) that would be most effective in addressing the error or irregularity. For each control you identify, indicate (1) which of the six physical control areas is involved, (2) if it is a preventive, detective, or corrective control, and (3) which of the four internal control objectives is addressed. A small business owner with a limited budget hires a part time bookkeeper who prepares a. all checks for cash disbursements and deposits all cash receipts in the bank. After six months on the job the bookkeeper suddenly quits and moves out of state. The business owner then discovers that the bookkeeper stole over $30,000 dollars of cash. Clerks in the receiving area of a retail hardware store are stealing some of the new tools b. that are received from suppliers that are intended to be stocked for sale to customers.

Answer 1

a) 1)periodic recocillations 2) detective control

b)1)approval authorities requirements 2)preventive control

c) 1)identification of Class of debtors or grading controls 2) preventive control

d) 1) Access Controls 2)detective control

e) 1)Separtaion of duties 2) preventive control