In Each of the Following Situations, Identify the Internal Control

question 81

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. Susan Scandal purchases supplies for Fraud Fortress 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, Susan takes an inventory of the supplies on hand and notifies the accounting department of the amount for the adjusting entry for supplies used.
b. Jim Devious, an accounting clerk, is responsible for opening the mail, recording and depositing cash receipts, and preparing the monthly bank reconciliation. Jim has not taken a vacation in over five years.
c. The law firm of Dewey, Cheatem & Howe has been extremely busy in recent months. The firm 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.

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Definitions:

Specialized Intellectual Abilities

Particular cognitive skills that are highly developed or honed in specific areas, such as mathematical reasoning or linguistic talent.

"g" Factor

A theory suggesting that a general intelligence factor underlies all cognitive abilities, significantly influencing performance on various intellectual tasks.

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The capacity to apply acquired understanding and past encounters.

Fluid Intelligence

The capability to think logically and solve problems in novel situations, independent of acquired knowledge.