Question

Describe some control problems that might arise and some mechanisms that Mary could use to help control these problems

AIP 5.7 Identifying Control Issues LO 3,9 Mary Sweet has just opened a candy shop. The store is open from 10 a.m. to 8 p.m. each day, which means that Mary must work a minimum of 10 hours a day for seven days a week. In addition to sales, she also must spend time on purchasing, paying bills, and cleaning up. Mary quickly decides that she needs to hire help. Her first hire is a person to operate the cash register for five days of the week. This person also will be responsible for closing the shop on those days so Mary can spend the evenings with her family. While Mary was operating the store by herself, she did not have to worry about control issues. Now that she is hiring another person, she must consider mechanisms to control the new employee. Describe some control problems that might arise and some mechanisms that Mary could use to help control those problems.

Answer 1

Mary sweet just opened a candy shop and Mary used to spend majority time like purchasing , paying bill and cleaning up activity .

But Mary later on realize that she wants to spend time with family and not able to engage complete time on Shop . She wants to hire some one to look after her Candy shop and she will review new person work and she can spend time with Family .

Mary has to develop certain internal control mechanism to conttol new employee

Mary has to review and cross check of all daily activity like , procurement , collection , Bank deposit , cash count at the end of the day . reconciled with ledger balance etc . She has to maintain all relevant control in relates to Purchase , payment to vendor , collection of money , cash reconciliation on daily basis , Bank deposit and slowly shw need to generate one Income Statement of Candy shop

Mary has to ensure that proper control mechanism should protect / safeguard asset and maintain accuracy