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Match Each of the Following Transactions with the Applicable Internal

Question 217

Matching

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

Premises:

Responses:

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

Perform regular and independent reviews

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

Divide responsibility for related transactions

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

Maintain adequate records

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

Establish responsibility

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

Apply technological controls

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

Insure assets and bond employees

A company fails to have financial records tested and evaluated for the effectiveness of internal control.

Separate recordkeeping from custody of assets

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

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

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

Premises:

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

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

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

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

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

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

A company fails to have financial records tested and evaluated for the effectiveness of internal control.

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

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

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

Responses:

Perform regular and independent reviews

Divide responsibility for related transactions

Maintain adequate records

Establish responsibility

Apply technological controls

Insure assets and bond employees

Separate recordkeeping from custody of assets

Correct Answer:

Premises:

Responses:

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

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

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

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

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

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

A company fails to have financial records tested and evaluated for the effectiveness of internal control.

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

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

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