The following control procedures are used at Torres Company for over-the-counter cash receipts. (a) For each procedure, explain the weakness in internal control, and identify the control principle that is violated.
(b) For each weakness, suggest a change in procedure that will result in good internal control.
1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attache case in the stock room until it is deposited in the bank.
(a) Weakness:
Principle:
(b) Recommended Change:
2. All over-the-counter receipts are processed by three clerks who use a cash register with a single cash drawer.
(a) Weakness:
Principle:
(b) Recommended Change:
3. The company accountant makes the bank deposit and then records the day's receipts.
(a) Weakness:
Principle:
(b) Recommended Change:
4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total.
(a) Weakness:
Principle:
(b) Recommended Change:
5. Cashiers are experienced; they are not bonded.
(a) Weakness:
Principle:
(b) Recommended Change: