In the following situation,which internal control procedure needs strengthening?
At Hofstra Services,the junior accountant collects cheques and cash from customers and records the transactions into the Journal.The controller approves the journal entries and bank reconciliations.The treasurer signs cheques and approves contracts.
A)Competent,reliable and ethical personnel
B)Assignment of responsibilities
C)Separation of duties
D)Documents and records

Question

In the following situation,which internal control procedure needs strengthening? 
At Hofstra Services,the junior accountant collects cheques and cash from customers and records the transactions into the Journal.The controller approves the journal entries and bank reconciliations.The treasurer signs cheques and approves contracts.
A)Competent,reliable and ethical personnel
B)Assignment of responsibilities
C)Separation of duties
D)Documents and records

Quizplus · Accepted Answer

While there is an element of separation of duties with the junior accountant collecting cheques and cash and the treasurer signing cheques and approving contracts, there should be further separation of duties between the junior accountant and the controller. The controller approving the journal entries and bank reconciliations could lead to errors or fraud going undetected. It would be more effective to have a different employee perform these tasks to enhance internal control.

In the Following Situation,which Internal Control Procedure Needs Strengthening