Unit 5 Assignment
Indicate whether each of the procedures of internal control represents: (1) a strength or (2) a weakness. For each weakness, indicate why it exists and what procedures should be put into place to alleviate the risk. For each letter A through H you should have at least a one paragraph answer.
a. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.
I think that this would be weak internal control because you have someone that deals with the money doing the bank reconciliation. This could be set up for inefficiency, errors, and fraud to happen. It should not be someone that can influence the outcome. The responsibilities should be divided up among different people or departments.
b. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts.
I think that this could be weak because what I think should happen is that the mail clerk should make the list of the receipts and send it to the manger or supervisor where then it is sent to the account receivable clerk for recording. I think by the mail clerk to just send it to the cashier could leave room for errors or fraud. I think that if the mail clerk writes the list and sends a copy even if it is to the cashier there is less than a chance that fraud or errors could happen.
c. At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers.
As much as I would be against this I would say that this is strong. It could stop people stealing if they knew that they would have to use their own funds if there is any shortage. The only thing is that thieves are smart and when there is a will there is a way. They could just find a way to take the money without having any shortages. But I...
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