Describe fraud and its impact; identify internal controls
Response to the following problem:
Identify the internal control weakness in the following situations. State how the person can hurt the company.
a. Juan Higaredo works as a security guard at VALID parking in Denver. Higaredo has a master key to the cash box where customers pay for parking. Each night Higaredo prepares the cash report that shows (a) the number of cars that parked on the lot and (b) the day's cash receipts. Becca Chen, the VALID treasurer, checks Higaredo's figures by multiplying the number of cars by the parking fee per car. Chen then deposits the cash in the bank.
b. Isabella Valdez is the purchasing agent for McGehee Sports Equipment. Valdez prepares purchase orders based on requests from division managers of the company. Valdez faxes the purchase order to suppliers, who then ship the goods to McGehee. Valdez receives each incoming shipment and checks it for agreement with the purchase order and the related invoice. She then routes the goods to the respective division managers and sends the receiving report and the invoice to the accounting department for payment.