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Match Each of the Following Transactions with the Applicable Internal

Question 176

Matching

Match each of the following transactions with the applicable internal control principle that is being violated listed.

Premises:

Responses:

A company manager keeps pre-signed checks in his desk drawer for employees to hand write when the accountant is out of the office.

Establish responsibility

A company fails to hire a CPA to perform an annual audit.

Apply technological controls

Only sales clerks use the cash registered, but they all share the same cash drawer.

Divide responsibility for related transactions

The bookkeeper prepares and signs checks and completes the bank reconciliation.

Perform regular and independent reviews

A large company has no internal auditor on staff.

Insure assets and bond employees

A company uses a voucher system, but the cash disbursement clerk pays directly from invoices received.

Maintain adequate records

A restaurant allows servers to keep cash collected in their aprons and ring in all sales at the end of the night.

Separate recordkeeping from custody of assets

A company does not bond its key cash-handling employees.

A company has a single department that handles purchasing, receiving, and inventory management.

Cashiers have access to the cash register recorded tape or file.

Premises:

A company manager keeps pre-signed checks in his desk drawer for employees to hand write when the accountant is out of the office.

A company fails to hire a CPA to perform an annual audit.

Only sales clerks use the cash registered, but they all share the same cash drawer.

The bookkeeper prepares and signs checks and completes the bank reconciliation.

A large company has no internal auditor on staff.

A company uses a voucher system, but the cash disbursement clerk pays directly from invoices received.

A restaurant allows servers to keep cash collected in their aprons and ring in all sales at the end of the night.

A company does not bond its key cash-handling employees.

A company has a single department that handles purchasing, receiving, and inventory management.

Cashiers have access to the cash register recorded tape or file.

Responses:

Establish responsibility

Apply technological controls

Divide responsibility for related transactions

Perform regular and independent reviews

Insure assets and bond employees

Maintain adequate records

Separate recordkeeping from custody of assets

Correct Answer:

Premises:

Responses:

A company manager keeps pre-signed checks in his desk drawer for employees to hand write when the accountant is out of the office.

A company fails to hire a CPA to perform an annual audit.

Only sales clerks use the cash registered, but they all share the same cash drawer.

The bookkeeper prepares and signs checks and completes the bank reconciliation.

A large company has no internal auditor on staff.

A company uses a voucher system, but the cash disbursement clerk pays directly from invoices received.

A restaurant allows servers to keep cash collected in their aprons and ring in all sales at the end of the night.

A company does not bond its key cash-handling employees.

A company has a single department that handles purchasing, receiving, and inventory management.

Cashiers have access to the cash register recorded tape or file.