For Each of the Independent Cases Below,identify the Principle of Internal

question 56

Essay

For each of the independent cases below,identify the principle of internal control that is violated,and recommend what should be done to remedy the violation.
1.In order to save money,Indigo Company has decided to drop its property insurance on assets; and stop bonding the cashiers who handle upwards of $5,000 in cash each day.
2.Jobs Company records each sale on a preprinted invoice.Because invoices are sometimes damaged in the process of preparation,the invoices are not prenumbered.Instead,the sales clerk writes the next number on each invoice as it is prepared.
3.Keegan Company is a very small business.Dylan Epps,one of the two office clerks,opens the mail each day and removes the cash receipts that come in the mail.Dylan also records the receipts in the cash records and the customer's account and deposits the cash in the bank.
4.Ludwig Company prides itself on hiring only the most competent employees.The owner,Jeremy Ludwig,believes that since the employees are highly competent he can show he trusts them completely by not checking up on their performance.
5.Maple Industries is a small business with three accounting employees.Each employee is well-trained and able to perform any of the accounting tasks,including handling cash receipts and cash payments,and preparing the bank reconciliation.Because of this cross-training,the employees share responsibilities for all of the tasks.

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Definitions:

Case Law

The collection of legal interpretations made by judges. They are considered to be law unless otherwise revoked by a statutory law. Also known as common law.

Quasi-contract

An obligation imposed by law to prevent unjust enrichment, where there is no actual contract between the parties.

Fair Market Value

Refers to the price at which an asset would trade in a competitive auction setting, reflecting its value in the eyes of both buyer and seller.

Damages

Compensation sought by or awarded to a party in a lawsuit for losses or injuries incurred due to another party's actions or negligence.