Listed Below Are Seven Errors or Problems Which Might Occur

question 138

Essay

Listed below are seven errors or problems which might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write "None." If you think more than one principle is appropriate, list all principles that apply.
Possible Errors or Problems
1. An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise.
2. A small fire destroys 3 days of cash receipts.
3. The official designated to sign checks is able to steal blank checks and issue them without fear of detection.
4. A salesclerk in serving customers often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer.
5. Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand.
6. Each cashier counts his own register drawer each day and verbally reports the results to the supervisor.
7. Cashiers with over 5 years' experience are not bonded.

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Definitions:

Grievance Procedures

Formal processes used within organizations to address complaints or disputes from employees regarding workplace issues.

Union Contracts

Agreements between employers and labor unions that outline wages, hours, benefits, and other employment terms and conditions.

Peer-review System

Peer-review System is a process used in academic and professional settings where work is evaluated by others in the same field to ensure quality and integrity.

Complaint Committee

A group established within an organization to handle and investigate complaints, particularly those related to workplace issues or discrimination.