Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. 3. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records. Weakness or Strength Internal Control Principle 1. 2. 3. 4. 5.

Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The company does not use electronic time clocks because it fears it will hurt employee morale. 2. An employee cannot approve their own request for purchases of inventory. 3. Several salesclerks share the same cash drawer. 4. Employees that handle easily transferable assets such as cash are bonded. 5. The company does not allow employees with access to cash to modify accounting records. Weakness or Strength Internal Control Principle 1. 2. 3. 4. 5.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Why do organizations have policies regarding the use of assets and why do staff need to be aware of them and other organizational policies, procedures and accounting standards? Internal control is enhanced by combining the control of a transaction with the record-keeping function.a.True.b. False. For efficiency of operations and better control over cash, a company should maintain only one bank account. i. True. ii. False.
Which of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
None
Help
An accounting manager, who has full access to a Company’s accounting system also has access to the bank account and is able to send cash payments without supervision. What is an internal control that should be implemented to reduce the risk of theft or fraud in this company?
Allowing only certain employees to order goods and services for the company is an example of what internal control procedure? a.Proper authorization b.Independent verification c.Segregation of duties d.Safeguarding of assets and records
Is it an entity inherent risk for the information below? A computer network and personal computers support Marco Inc's accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. If it is an inherent risk, what is the feature of the firm that will possibly affect inherent risk and explain how and why; that is whether it increases or decreases inherent risk. Please address a specific risk to the accuracy of the financial statements with the "how" and whether…
if a manager is incharge of the Credit Right Software Corp department which involves sells leading account sooftare product and two of his employess commited fraud. How should the manager prepare himself to understand what causes individuals to commit fraud and how it happens?
Two very common ways that employees commit fraud against their employers is the misstatement of reimbursable expense accounts and the misuse of office supplies for personal purposes. Although these schemes are usually not individually significant, their magnitude can be damaging if these practices are widespread. Please comment on these types of fraud (and other examples of employee fraud) and what internal controls they would put in place in an organization to curb this activity.
Whole Fruits Market took the following actions to improve internal controls. For each of the following actions, select the internal control principle the company followed. a. Personal ID cards are used to limit access to only authorized employees. b. The company divides responsibility for a transaction between multiple departments. c. Each cashier is designated a specific cash drawer and is solely responsible for cash in that drawer. d. Purchased an insurance (bonding) policy against losses from theft by a cashier. e. To ensure equipment theft does not go undetected, detailed accounting records are kept. f. The company's internal auditors frequently assess the performance of internal controls.