In Each of the Following Situations, Identify the Internal Control

question 156

Essay

In each of the following situations, identify the internal control weakness as well as the business's potential problem, and suggest a solution.
a)The law firm of Douglas and Gere has been extremely busy in recent months. It needs another lawyer, but has not had the chance to hire one. In the meantime, one of the secretaries has been preparing briefs, writing up wills, and preparing the closing papers for various real estate deals.
b)Tobey Smith, an accounting clerk, is responsible for opening the mail, recording and depositing cash receipts, as well as preparing the monthly bank reconciliation. Tobey has not taken a vacation in over five years.
c)Carole Tobias purchases supplies for Darcey Company and stores them in a locked room for which she has the key. She is also responsible for distributing these supplies to employees upon request. At the end of each month, Carole takes an inventory of the supplies on hand and notifies the accounting department of the amount of the adjusting entry for supplies used.

---

Definitions:

Hire and Fire

The ability or authority of an employer to recruit new employees and, if necessary, terminate their employment.

RUPA

The Revised Uniform Partnership Act is a set of laws intended to govern partnerships and their operations in the United States.

Statement of Partnership Authority

A document that delineates the extent of a partner's ability to make decisions and bind the partnership in contractual agreements.

Real Property

Land and anything permanently attached to it, such as buildings and structures.