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Each of The Following Situations Has An Internal Control Weakness

Each of the situations described has an internal control weakness that could lead to problems: 1) Firing the external auditor removes an independent review of internal controls 2) Not keeping invoices could facilitate revenue fraud 3) One employee taking no vacation enables fraud to go undetected for long periods 4) Unrestricted petty cash access could result in theft 5) Removing security cameras enables cash register fraud 6) Not training employees fails to ensure qualifications or consistent job performance Proper controls like independent review, record keeping, mandatory vacation, restricted access, monitoring, and training need implementing.

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132 views1 page

Each of The Following Situations Has An Internal Control Weakness

Each of the situations described has an internal control weakness that could lead to problems: 1) Firing the external auditor removes an independent review of internal controls 2) Not keeping invoices could facilitate revenue fraud 3) One employee taking no vacation enables fraud to go undetected for long periods 4) Unrestricted petty cash access could result in theft 5) Removing security cameras enables cash register fraud 6) Not training employees fails to ensure qualifications or consistent job performance Proper controls like independent review, record keeping, mandatory vacation, restricted access, monitoring, and training need implementing.

Uploaded by

Amit Pandey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Solved: Each of the following situations has an internal

control weakness
Each of the following situations has an internal control weakness

Each of the following situations has an internal control weakness.


a. Jade Applications’ has decided that one way to cut costs in the upcoming year is to fire the
external auditor. The business believes that the internal auditor should be able to efficiently
monitor the company’s internal controls.
b. In an effort to minimize the amount of paperwork, Ross Homes has decided that it will not
keep copies of customer invoices related to sales revenue. Ross believes that this effort will
minimize the amount of data storage the company will have to pay for.
c. Elle Bee, a trusted employee for many years, has never taken a vacation. The owner believes
that he’s lucky that she is so committed to her job.
d. The Medicine Chest Company keeps a small petty cash fund to handle small cash
transactions. Because no one wants to volunteer to be the custodian, the business manager
has decided that all employees should have access to the petty cash. She figures that as long
as each employee fills out a petty cash ticket, then there are proper controls in place.
e. Due to the cost of maintaining the security cameras, Wings and More has decided that it will
remove the cameras that monitor the cash register.
f. Bryan Miller, manager of Hardware Emporium, prides himself on hiring exceptionally skilled
employees who need no training to do their jobs.

Requirements
1. Identify the missing internal control characteristics in each situation.
2. Identify the possible problem caused by each control weakness.
3. Propose a solution to each internal control problem.

Each of the following situations has an internal control weakness

ANSWER
https://solvedquest.com/each-of-the-following-situations-has-an-internal-control-weakness/

Reach out to [email protected] for enquiry.


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