Describe fraud and its impact; evaluate 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. Kirk Kennedy works as a security guard at TOWN parking in Des Moines. Kennedy has a master key to the cash box where customers pay for parking. Each night Kennedy prepares the cash report that shows (a) the number of cars that parked on the lot and (b) the day's cash receipts.
Linda Alton, the TOWN treasurer, checks Kennedy's figures by multiplying the number of cars by the parking fee per car. Alton then deposits the cash in the bank.
b. Meagan Morales is the purchasing agent for RG Sports Equipment. Morales prepares purchase orders based on requests from division managers of the company. Morales faxes the purchase order to suppliers, who then ship the goods to RG Sports Equipment. Morales 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.