Question

Internal Control Bart Simons has worked for Dr. Homer Spring for many years. Bart has been

a model employee. He has not taken a vacation in over four years, always stating that work was

too important. One of Bart’s primary jobs at the clinic is to open mail and list the checks received.

He also collects cash from patients at the cashier’s window as patients leave. There are times that

things are so hectic that Bart does not bother to give the patient a receipt; however, he assures them

that he will make sure their account is properly credited. When things slow down at the clinic, Bart

often offers to help Lisa post payments to the patients’ accounts receivable ledger. Lisa is always

happy to receive help since she is also quite busy and because Bart is such a careful worker.

Required

Identify any internal control principles that may be violated in Dr. Spring’s clinic.

Answer 1

The Internal control principles that are violated in Dr. Spring's clinic are :

1)SEGREGATION OF DUTIES: It requires that different individuals be assignes responsibility for different elements of related activities,particularly those involving authorisation , custody , or record keeping should not be responsible for physical control of that assets.Different individuals performing these functions creates a system of checks and balances .

2)PROPER AUTHORISATION OF TRANSACTIONS and activities helps ensure that all activities adhere to established policies and guidelines ,including Board of regents rules.

3)ADEQUATE DOCUMENTS AND RECORDS include adequate supporting documentation and timely preparation of documents.

4)INDEPENDENT CHECKS OF PERFORMANCE ,which are carried out by employees who did not do the work being ckecked ,help ensure the reliability of accounting information and the efficiency of operations.