For each of these five separate cases, identify the principle of internal contro
ID: 2352233 • Letter: F
Question
For each of these five separate cases, identify the principle of internal control that is violated.Recommend what the business should do to ensure adherence to principles of internal control
5. Desi West's manager has told her to reduce costs. Desi decides to raise the deductible on the plant's property insurance from $5000 to 10,000. This cuts the property insurance premium in half. In a related move she decides that bonding the plant's employees is a waste of money since the company has not expericnced any loses due to employee theft. Desi saves the entire amount of the bonding insuracne premium by dropping the bonding insurance.
Explanation / Answer
Desi West’s manager has told her to reduce costs. Desi decides to raise the deductible on the plant’s property insurance from $5,000 to $10,000. This cuts the property insurance premium in half. In a related move, she decides that bonding the plant’s employees is a waste of money since the company has not experienced any losses due to employee theft. Desi saves the entire amount of the bonding insurance premium by dropping the bonding insurance.PV : Establish responsibilities. Bond employees.
Desi should not decide by herself to raise the deductible. She should just submit the proposal to do so to her manager and let management decide. In addition, she should reinstate the bond on the employees.
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