Each of the following situations has an internal control weakness.
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Rite Way Applications sells accounting software. Recently, development of a new program stopped while the programmers redesigned Rite Way's accounting system. Rite Way's accountants could have performed this task
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Betty Grable has been your trusted employee for 30 years. She performs all cash handling and accounting duties. Ms. Grable just purchased a new Lexus and a new home in an expensive suburb. As owner of the company, you wonder how she can afford these luxuries because you pay her only $35,000 a year and she has not source of outside income.
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Sanchez Hardwoods, a private company, falsified sales and inventory figures in order to get an important loan. The loan went through, but Sanchez later went bankrupt and could not repay the bank.
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The office supply company where Champs Sporting Goods purchases sales receipts recently notified Champs that its documents were not prenumbered. Alex Champ, the owner, replied that he never uses receipt numbers.
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Discount stores such as Tallon make most of their sales for cash, with the remainder in credit card sales. To reduce expenses, one store manager ceases purchasing fidelity bonds on the cashiers.
- Bob's Burger House keeps all cash receivedfrom sales in a safe because Bob thinks banks are not safe
Requirement
R1. Identify the missing internal control characteristics in each situation.
R2. Identify the possible problem caused by each control weakness.
R3. Propose a solution to each internal control problem. from sales in a safe because Bo think's banks are not safe