Reference no: EM133836702

Joe has recently been hired as the manager of Loyola's Coffee, a local coffee shop. During his first month as store manager, Joe encountered the following internal control situations:

1. Loyola's Coffee has one cash register shared among the employees working that shift. Prior to Joe joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Joe added three new cash registers so each employee working a shift is assigned to a separate cash register that only the assigned employee uses.

2. Since only one employee uses each cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Joe expects each employee to balance the drawer to the penny and implements a policy that the employee must pay for any shortages out of their own pocket. The employee is allowed to keep any overages.

3. Loyola's Coffee has a generous vacation policy for all employees. Employees can choose to take accrued paid vacation, or they can sell their unused vacation time back to Loyola. Joe replaced the sell-back policy with a policy that allows employees to be paid for unused vacation at the end of their employment.

4. Prior to Joe joining the coffee shop, Loyola's Coffee had been experiencing shortages of coffee, cups, and other supplies from the supply room. Joe hired a full-time security guard to monitor the supply room.