Classifying Internal Control Procedures

Required:

Match each of the control procedures listed below with the most closely related control procedures type. Your answer should pair each of the numbers 1 through 10 with the appropriate letter.

Control Procedure Types

A. Clearly defined authority and responsibility

B. Segregation of duties

C. Adequate documents and records

D. Safeguards over assets and records

E. Checks on recorded amounts

Control Procedures

1. The controller is required to sign the daily summary of expenditures to authorize payment.

2. Division managers are evaluated annually on the basis of their division's profitability.

3. Invoices received from outside suppliers are filed with purchase orders.

4. Employees with access to the accounting records are not permitted to open the mail, because it contains many payments by check from customers.

5. The extent of access to the many segments of the company's computer system is tightly controlled by individual identification cards and passwords that change at regular intervals.

6. Each shipment to customers from inventory is recorded on a specially printed form bearing a sequential number; these forms are the basis for entries into the computer system, which makes entries to inventory records and produces periodic reports of sales and shipments.

7. At regular intervals, internal audit reviews a sample of expenditure transactions to determine that payment has been made to a bona fide supplier and that the related goods or services were received and appropriately used.

8. A construction company stores large steel girders in an open yard surrounded by a 5-foot fence and stores welding supplies in a controlled-access, tightly secured concrete building.

9. Cash registers display the price of each item purchased to the customer as it is recorded and produce a customer receipt that describes each item and gives its price.

10. The person in the controller's office who prepares and mails checks to suppliers cannot make entries in the general ledger system.