Assignment from readings
Assignment from the Readings
ACC/340
Assignment from the Readings
8-17 Fairfax Recreation Center (Internal Controls at a Fitness Center)
The Fairfax Recreation Center is a neighborhood fitness center equipped with an indoor swimming pool, exercise equipment, and a running track. The Center is open seven days a week, from 8:00 A.M. to 10:00 P.M. Stationed just inside the front doors is a turnstile. An employee oversees access through the turnstile. Before anyone can enter the facility, they must either present their membership card or pay a $6 daily fee. When the employee at the turnstile collects cash for daily fees, he or she also has the visitor complete a waiver form. The employee then deposits the cash in a locked box and files the forms. At the end of each day the Recreation Center accountant collects the cash box, opens it, removes the cash, and counts it. The accountant then gives a receipt for the cash amount to the employee on turnstile duty. The accountant takes the cash to the bank each evening. The next morning, the accountant makes an entry in the cash receipts journal for the amount indicated on the bank deposit slip. Susan Porcano, the Fairfax Recreation Center General Manager, has some concerns about the internal controls over cash. However, she is concerned that the cost of additional controls may outweigh the benefits. She decides to ask the organization’s outside auditor to review the internal control procedures and to make suggestions for improvement. Assume that you are the outside auditor. Indicate weaknesses in the existing internal control system over cash admission fees and recommend one improvement for each of the weaknesses you identified.
Organize your answers as follows:
9-15. Identify one or more control procedures (either general or application controls, or both) that would guard against each of the following errors or problems.
a. Leslie Thomas, a secretary at the university, indicated
ACC/340
Assignment from the Readings
8-17 Fairfax Recreation Center (Internal Controls at a Fitness Center)
The Fairfax Recreation Center is a neighborhood fitness center equipped with an indoor swimming pool, exercise equipment, and a running track. The Center is open seven days a week, from 8:00 A.M. to 10:00 P.M. Stationed just inside the front doors is a turnstile. An employee oversees access through the turnstile. Before anyone can enter the facility, they must either present their membership card or pay a $6 daily fee. When the employee at the turnstile collects cash for daily fees, he or she also has the visitor complete a waiver form. The employee then deposits the cash in a locked box and files the forms. At the end of each day the Recreation Center accountant collects the cash box, opens it, removes the cash, and counts it. The accountant then gives a receipt for the cash amount to the employee on turnstile duty. The accountant takes the cash to the bank each evening. The next morning, the accountant makes an entry in the cash receipts journal for the amount indicated on the bank deposit slip. Susan Porcano, the Fairfax Recreation Center General Manager, has some concerns about the internal controls over cash. However, she is concerned that the cost of additional controls may outweigh the benefits. She decides to ask the organization’s outside auditor to review the internal control procedures and to make suggestions for improvement. Assume that you are the outside auditor. Indicate weaknesses in the existing internal control system over cash admission fees and recommend one improvement for each of the weaknesses you identified.
Organize your answers as follows:
9-15. Identify one or more control procedures (either general or application controls, or both) that would guard against each of the following errors or problems.
a. Leslie Thomas, a secretary at the university, indicated