The following control procedures are used in Mendy Lang’s Boutique Shoppe for cash disbursements. 1.The company accountant prepares the bank reconciliation and reports any discrepancies to the owner. 2.The store manager personally approves all payments before signing and issuing checks. 3. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. 4. After payment, bills are filed in a paid invoice folder. 5. The company checks are unnumbered. Instructions (a) For each procedure, explain the weakness in internal control, and identify the internal control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control.
The following control procedures are used in Mendy Lang’s Boutique Shoppe for cash disbursements.
1.The company accountant prepares the bank reconciliation and reports any discrepancies to the owner.
2.The store manager personally approves all payments before signing and issuing checks.
3. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register.
4. After payment, bills are filed in a paid invoice folder.
5. The company checks are unnumbered.
Instructions
(a) For each procedure, explain the weakness in internal control, and identify the internal control principle that is violated.
(b) For each weakness, suggest a change in the procedure that will result in good internal control.
Internal control is a process carried out by a company's board of directors, management, and other personnel to provide reasonable assurance that information is reliable, accurate, and timely. In terms of adhering to applicable laws, regulations, contracts, policies, and procedures.
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