Question

Percy Printers uses the following control procedures.

a) Cheques are not prenumbered because the purchasing manager must approve payments before cheques are signed

b) The company's accountant records the receipt of cash and cheques and makes deposits at the bank

c) The employee who works the register reconciles cash to receipts at the end of the day

d) Employees know that the internal auditor will perform a bank reconciliation at the end of each month

e) Petty cash is kept in a back room but is not monitored throughout the day

f) A cashier lets another employee work his assigned register while he helps a customer

Identify the problem with each internal control procedure.

Answer 1

	Problem in Internal Controle
Cheques are not prenumbered because the purchasing manager must approve payments before cheques are signed	Maintenance Adequate Documentation
The company's accountant records the receipt of cash and cheques and makes deposits at the bank	Segregation of Duties
The employee who works the register reconciles cash to receipts at the end of the day	Segregation of Duties
Employees know that the internal auditor will perform a bank reconciliation at the end of each month	Independent verification
Petty cash is kept in a back room but is not monitored throughout the day	Physical Security
A cashier lets another employee work his assigned register while he helps a customerIdentify the problem with each internal control procedure.	Establishing Responsiblilty