Instructions: Read the following narrative system's description.
What aspects of this system are not included, which would be necessary for properly designed internal control?
Accounts Receivable and Cash Receipts Mail containing cash receipts (check) is identified by information on the envelope and sent to the mail receipts department.
The mail is opened by two individuals who list each individual payment and the amount remitted on a three-part mail receipt list.
Both individuals initial the mail receipt list and one copy of the mail receipt list is sent to accounts receivable subsidiary bookkeeper for posting to the subsidiary accounts receivable accounts and the cash and another copy of the mail receipt list is sent to the cashier.
The third copy is retained in the mail receipts department, initialed by both individuals who opened and listed the mail receipts. This mail receipts list is then filed by date.
The accounts receivable subsidiary bookkeeper who posts to the subsidiary accounts receivable then posts transactions to each individual subsidiary account.
The files are maintained on a computer and the bookkeeper performs the data entry.
When the posting process is completed, the accounts receivable subsidiary bookkeeper compares the total posted to the subsidiary accounts receivable with the total on the copy of the mail receipts list sent to bookkeeping by the mail receipts department.
If both amounts agree, then the copy of the mail receipts list is initialed by the accounts receivable subsidiary bookkeeper and filed by date.
If the totals do not agree, then the accounts receivable subsidiary bookkeeper compares the posting to each individual account, reads the mail receipts list, and performs other error correction procedures until the amounts reconcile with one another. The cashier recounts the cash and prepares the daily deposit.
If the cash does not equal the total account on the mail receipt list, then the cashier takes appropriate action, such as notifying management of the discrepancy.
The cashier takes the deposit to the bank and obtains a duplicate deposit ticket, which is attached to the mail receipts list sent to the cashier by the mail receipts department. These two documents are filed by date.