Your friend Lori has hired you to evaluate the following internal control proced

Question

Your friend Lori has hired you to evaluate the following internal control procedures.
a. Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which principle relates to each of the internal controls.
b. For the weaknesses, you also need to state a recommendation for improvement.

1) All checks are printed using indelible ink.
2) Cash register tapes are used.
3) The company accountant handles deposits and reconciles the bank account.
4) All over-the-counter receipts are registered by 2 clerks who share a cash drawer.
5) The office manager is in charge of petty cash.

Explanation / Answer

1. Its a streangth Principle: Restrict access 2. Its a streangth Principle: Document procedures 3. Its a weakness Principle: Segregate duties Improvements: Do not make one employee responsible for all activities 4. Its a weakness Principle: Establish responsibility improvement: Assign each task to only one employee 5. Its a streangth Principle: Independently verify. Its a streangth Principle: Document procedures 3. Its a weakness Principle: Segregate duties Improvements: Do not make one employee responsible for all activities 4. Its a weakness Principle: Establish responsibility improvement: Assign each task to only one employee 5. Its a streangth Principle: Independently verify. Its a weakness Principle: Establish responsibility improvement: Assign each task to only one employee 5. Its a streangth Principle: Independently verify.

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