Question

1. INTERNAL CONTROL WEAKNESSES - SUPERMARKET The following describes the information system for a supermarket: Customers push their shopping carts to the check- out register where a clerk processes the sale. The market has several registers, but they are not all in continuous use depending on the level of business in the market. During busy times, employees will be taken from other jobs such as stocking shelves and unloading trucks to man a register. This is done quickly and efficiently since the registers are not assigned to specific clerks, thus eliminating the need to logon to the system. At the beginning of the shift, the supervisor places $100 in small bills in each register (float) to enable the clerks to make change. The supervisor signs a log in the treasury office indicating that he has taken custody of the float and places the cash drawers into the respective registers. Sales to customers are for cash or credit card only, with the majority of sales being cash. The clerk receives the cash from the customer, makes change, and issues a receipt for the purchase. For credit card sales, the clerk swipes the card and obtains online approval from the card issuer at the time of sale. The customer then signs the credit card voucher, which the clerk places in a special compartment of the cash register drawer. The customer receives a receipt for the purchase and a copy of the credit card voucher. At the end of the shift, the supervisor returns the cash register drawers containing the cash, checks, and credit cards receipts to the treasury clerk and signs a log that he has handed in the cash drawers.
   
   The clerk later counts the cash and credit card receipts. Using a stand-alone PC, he records the total sales amounts in the sales journal and the general ledger sales and cash accounts. The treasury clerk then prepares a deposit slip and delivers the cash, checks, and credit card vouchers to the local branch of the bank two blocks away from the market.
   
   Required Discuss the physical internal control weaknesses in the system.

Answer 1

For the check sales, there is insufficient verification of the customer’s ability to pay the check; simply because the customer has not written a bad check before, does not mean they will not have a bad check currently. Thus, they should develop some communication with the bank so that they are able to automatically verify the customer’s bank balance is enough to cover the amount of the sale.

For the cash sales, the store should also create a receipt for themselves, as only creating receipt for the customers does not allow the store itself to keep track of their cash sales for the day. They should also have the treasury clerk then scan these receipts into an online database for transaction verification when customers wish to return particular goods.

There should also be segregation of duties between the Treasury clerk totaling the sales amounts and preparing a deposit slip and delivering the cash, checks, and credit card vouchers.

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