Question

Identifying internal controls. Consider each situation separately. Identify the missing internal control procedure from these characteristics:

• Assignment of responsibilities

• Separation of duties

• Audits

• Electronic devices

• Other controls (specify)

a. While reviewing the records of Quality Pharmacy, you find that the same Team member orders merchandise and approves invoices for payment.

b. Business is slow at Amazing Amusement Park on Tuesday, Wednesday, and Thursday nights. To reduce expenses, the business decides not to use a ticket taker on those nights. The ticket seller (cashier) is told to keep the tickets as a record of the number sold.

c. The same trusted team member has served as a cashier for 12 years.

d. When business is brisk, Fast Mart deposits cash in the bank several times during the day. The manager at one store wants to reduce the time employees spend delivering cash to the bank, so he starts a new policy. Cash will build up over weekends, and the total will be deposited on Monday.

e. Grocery stores such as Convenience Market and Natural Foods purchase most merchandise from a few suppliers. At another grocery store, the manager decides to reduce paperwork. He eliminates the requirement that the receiving department prepare a receiving report listing the goods actually received from

the supplier.

Short answer

1. The has a lack of separation of duties
2. The has a lack of separation of duties
3. The company is missing the job rotation
4. The company is missing the other internal control
5. The company is the missing assignment of responsibilities

Step-by-step solution

Step-by-Step Solution Step 1: Definition of internal control

Internal control is the control that controls the internal activity of the company.

Missing internal control procedure

1. In this situation, the missing internal control is the separation of the duties because the same team member orders merchandise and approves invoices for payment.
2. In this situation, the missing internal control is the separation of duties because the company decides not to use a taker; instead, they give this duty to the ticket seller.
3. This type of situation comes under other control because, in this, the company does not rotate the job.
4. This situation comes under the other control because ofnot depositing cash soon enough for adequate security.
5. This statement clearly shows the deficiency of assignment of responsibilities.