As payments are received, one mailroom employee is assigned the responsibility of prelisting receipts and preparing the deposit slip prior to forwarding the receipts, deposit slip, and remittance advices to accounts receivable for posting. Accounts receivable personnel re-foot the deposit slip, stamp a restrictive endorsement on the back of each check, and then forward the receipts and deposit slip to the treasury department. Evaluate the internal control of the described process. Which of the following is a reasonable assessment of internal control in this process?
A)Adequate internal control.
B)Inadequate internal control because mailroom employees should not have access to cash.
C)Inadequate internal control because treasury employees should prepare the deposit slip.
D)Inadequate internal control because of a lack of separation of duties.

Question

Quizplus · Accepted Answer

The process lacks a proper separation of duties as one employee in the mailroom is responsible for prelisting receipts and preparing the deposit slip, which could lead to potential errors or fraudulent activities. Additionally, the mailroom employee should not have access to cash as it increases the risk of theft. Ideally, different employees should be responsible for receiving, recording, and depositing cash. The accounts receivable personnel re-footing the deposit slip and endorsing the checks appropriately is a positive aspect of internal control. However, the treasury department should prepare the deposit slip and reconcile the receipts to ensure that all cash has been accounted for.

As Payments Are Received, One Mailroom Employee Is Assigned the Responsibility