Cantu Company is a rapidly growing start-up business. Its recordkeeper, who was hired nine months ago, left town after the company’s manager discovered that a large sum of money had disappeared over the past three months. An audit disclosed that the recordkeeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé, who cashed the checks but never worked for the company, left town with the recordkeeper. As a result, the company incurred an uninsured loss of $84,000. Evaluate Cantu’s internal control system and indicate which principles of internal control appear to have been ignored.
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