Reference no: EM13914959
Fuentes is a retail store with several departments. Its internal control procedures for cash sales and purchases are as follows.
Cash sales. The sales clerk in each department rings up every cash sale on the department's cash register. The cash register produces a sales slip, which the clerk gives to the customer along with the merchandise. A continuous tape locked inside the cash register makes a carbon copy of the sales ticket. At the end of each day, the sales clerk presses a "total" key on the register, and it prints the total sales for the day on the continuous tape. The sales clerk then unlocks the tape, reads the total sales figure, and makes the entry in the accounting records for the day's cash sales. Next, she counts the cash in the drawer, places the $200 change fund back in the drawer, and gives the cash received to the cashier. Finally, she files the cash register tape and is ready for the next day's business.
Purchases. At the request of the various department heads, the purchasing agent orders all goods. When the goods arrive, the receiving clerk prepares a receiving report in triplicate. The receiving clerk keeps one copy; the other two copies go to the pur- chasing agent and the department head. Invoices are forwarded immediately to the accounting department to ensure payment before the discount period elapses. After payment, the invoice is forwarded to the purchasing agent for comparison with the purchase order and the receiving report and is then returned to the accounting office for filing.
Required:
1. Identify the significant internal control weaknesses in each of the above situations.
2. In each case identified in requirement 1, recommend changes that would improve the system.
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