For Each of the Following Situations, Indicate Which Internal Control

question 155

Essay

For each of the following situations, indicate which internal control procedure ABC company has violated:
_____ 1. Since they are costly, background checks are not done for the employees.
_____ 2. Purchases of items on credit do not need the approval of the purchasing department.
_____ 3. All hard copies of documents are shredded after one month and electronic records are deleted after two months.
_____ 4. The company does not prepare operating or cash budgets.
_____ 5. The accountant receives the cash and records the cash receipts.
_____ 6. There are no locks in the area where inventory is stored.
_____ 7. The hiring, firing and pay adjustments and made by the department foremen.

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Definitions:

Vacuum Pump

A device that removes gas molecules from a sealed volume to create a partial vacuum, often used in automotive and industrial applications.

A/C System

Air Conditioning System, a system for controlling the humidity, ventilation, and temperature in a vehicle or building.

Boil Point

The temperature at which a liquid turns to vapor.

Pressure Relief Valve

A pressure-limiting device that trips at a predetermined pressure to define circuit pressure or act as a safety device. A safety pop-off valve is one type of pressure relief valve.