> ExercisesE8-12 Understanding the Sarbanes-Oxley Act and identifying internal cstrengths and weaknessesThe following situations suggest a strength or a weakness in internal control.a. Top managers delegate all internal control procedures to the accountingdepartment.E8-14Learning Objective 1b. Accounting department staff (or the bookkeeper) orders merchandise andapproves invoices for payment.c. Cash received over the counter is controlled by the sales clerk, who rings up thsale and places the cash in the register. The sales clerk matches the total recordedby the register to each day's cash sales.d. The employee who signs checks need not examine the payment packet because beis confident the amounts are correct.ESRequirements1. Define internal control.2. The system of internal control must be tested by external auditors. What law orrule requires this testing?3. Identify each item in the list above as either a strength or a weakness in internalcontrol, and give your reason for ach answer.

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1. Define internal control. 2. The system of internal control must be tested by external auditors. What law or rule requires this testing? 3. Identify each item in the list above 3s either a strength or a weakness in internal control, and give your reason for ach answer.

1. Define internal control. 2. The system of internal control must be tested by external auditors. What law or rule requires this testing? 3. Identify each item in the list above 3s either a strength or a weakness in internal control, and give your reason for ach answer.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

> Exercises
E8-12 Understanding the Sarbanes-Oxley Act and identifying internal c
strengths and weaknesses
The following situations suggest a strength or a weakness in internal control.
a. Top managers delegate all internal control procedures to the accounting
department.
E8-14
Learning Objective 1
b. Accounting department staff (or the bookkeeper) orders merchandise and
approves invoices for payment.
c. Cash received over the counter is controlled by the sales clerk, who rings up th
sale and places the cash in the register. The sales clerk matches the total recorded
by the register to each day's cash sales.
d. The employee who signs checks need not examine the payment packet because be
is confident the amounts are correct.
ES
Requirements
1. Define internal control.
2. The system of internal control must be tested by external auditors. What law or
rule requires this testing?
3. Identify each item in the list above as either a strength or a weakness in internal
control, and give your reason for ach answer.

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