A-1 Machines is located in Saskatoon, Saskatchewan, with a sales territory covering the entire province.
The company has established a large petty cash fund to handle small cash payments and cash advances to the salespeople to cover frequent sales trips.
The controller, Margaret Hamm, has decided that two people (Anne Bloom and Tom Hurry) should be in charge of the fund since money is often needed when one person may be out for coffee or lunch. Hamm also feels this will increase internal control, as the work of one person will serve as a check on that of the other.
Regular small cash payments are handled by either Bloom or Hurry, who make the payment and have the person receiving the money sign a sheet of paper listing the date and reason for the payment. Whenever a salesperson requires an advance for a trip, he or she simply signs a receipt for the money received. The salespeople later submit receipts for the cost of the trip to either Bloom or Hurry to offset the cash advance.
Hamm is puzzled that the fund is almost always out of balance and either over or short.
Required
Comment on the internal control procedures of A-1 Machines. Suggest changes that you think would improve the system.