Question

L ULUULWCARIIESS DJI Interna control, and give your reason for each answer. E8-13 Identifying internal controls Consider each situation separately. Identify the missing internal control procedure from these characteristics: • Assignment of responsibilities • Separation of duties • Audits • Electronic devices • Other controls (specify)

Answer 1

Answers:

1a. The same person that orders the merchandise is approving the invoice payments. The missing internal control procedure is separation of duties. There should be one person that orders the merchandise and another person approving the invoice payments.

When the cashier is selling the tickets and keeps the tickets as a record of the number sold, the missing internal control procedure is the separation of duties. Separation of duties should be maintained in order to promote accuracy and limit fraud.

When the same employee has served as cashier for 12 years, the missing internal control is other control of no job rotation.

d. In the new policy where cash will build up over weekend, the missing internal control is other control of not properly safeguarding the cash assets. Holding the cash in the store is risky and susceptible to theft

By eliminating the receiving report which is prepared by the receiving department, the missing internal control is other controls i.e. lack of maintenance of documents and records. The receiving report is the proof that the vendor has shipped the correct items.