each of these five separate cases, identify the principleis) of internal control
ID: 2575144 • Letter: E
Question
each of these five separate cases, identify the principleis) of internal control that is violated. Recommend what the business p 1. Latisha Tally is the company's computer specialist and oversees its computerized payroll system. Her nd what the business should do to ensure adherence to principles of internal control boss recently asked her to put password protection on all office computers. Latisha has put a password in place that allows only the boss access to the file where pay rates are changed and personnel are 2. Marker Theater has a computerized order-taking system for its tickets. The system is active all week 3. Sutton Company has two employees handling acquisitions of inventory. One employee places pur- 4. The owner of Super Pharmacy uses a check protector to perforate checks, making it difficult for added or deleted from the payroll. and backed up every Friday night. chase orders and pays vendors. The second employee receives the merchandise. anyone to alter the amount of the check. The check protector is on the owner's desk in an office that contains company checks and is normally unlocked 5. Lavina Company is a small business that has separated the duties of cash receipts and cash disburse- ments. The employee responsible for cash disbursements reconciles the bank account monthlyExplanation / Answer
Answer 1
violations
Technological control
Effective segregation of duties
It is safe to assume that Tally has knowledge of employee passwords since she implemented the system of password protection companywide. It is a potentially insecure situation that Tally processes payroll and can now probably change employee pay rates at will, or add a fictitious employee to the file. The company should hire an outside consultant to rework the password protection system so Tally will not have the knowledge that she currently possesses.
Answer 2
violations
Technological controls.
The theater’s system needs to be backed up at daily. The theater needs to change the backup policy and make sure the backup copies are stored off premises.
Answer 3
violations
Effective segregation of duties
The company needs to have three employees for these functions.
1st for purchase orders, 2nd for receive merchandise, and 3rd for pay vendors.
Answer 4
violations
Technological controls.
The use of the check protector is a good control. However it must be locked or password protected for escaping it from unauthorized access.
Answer 5
violations
Effective segregation of duties
It is good internal control to separate duties for cash receipts and cash disbursements. However, one employee is responsible for recording cash disbursements and making cash reconciliation which is inappropriate because these two functions must be segregated to two different persons.
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