Which of the following demonstrates a poor internal control procedure?
A)The bookkeeper makes cash deposits and records journal entries related to cash,while the treasurer prepares the bank reconciliation.
B)The president,who does no bookkeeping,prepares the bank reconciliation each month.
C)The treasurer signs all checks after the bookkeeper prepares the supporting documents.
D)One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger.

Question

Quizplus · Accepted Answer

In option A, the same individual (the bookkeeper) is responsible for both handling cash deposits and recording related journal entries, which violates the principle of segregation of duties. This lack of separation can increase the risk of errors or fraud. Effective internal controls require that different individuals handle different aspects of financial transactions to provide checks and balances.

Which of the Following Demonstrates a Poor Internal Control Procedure