At the West Texas Clothing Store, a sales employee assists customers with finding the items the client wishes to purchase, ringing up the purchase and collecting the cash. At the end of the day, this employee counts the cash and fills out a cash-count form. Which internal control procedure is being violated by West Texas Clothing Store?
A) Competent, reliable, and ethical personnel should be hired.
B) Job rotation improves internal control.
C) To validate their accounting records, a company should have an audit by an external accountant.
D) Separation of duties is necessary.

Question

Quizplus · Accepted Answer

The scenario violates the principle of separation of duties because the same employee is responsible for assisting customers, handling cash, and counting cash at the end of the day. This concentration of responsibilities increases the risk of errors or fraud. Separation of duties is a key internal control that helps prevent fraud and errors by dividing responsibilities among different individuals.

At the West Texas Clothing Store, a Sales Employee Assists