For the following five scenarios, identify the principle of internal control that is violated. Next, make a recommendation as to what the business should do to ensure adherence to principles of internal control.
1. At Stratford Iron Company, Jill and Joan alternate lunch hours. Normally Jill is the petty cash custodian, but if someone needs petty cash when Jill is at lunch, Joan fills in as custodian.
2. Nadine McDonald does all the posting of patient charges and payments at the Northampton Medical Clinic. Every night, Nadine backs up the computerized accounting system to a tape and stores the tape in a locked file at her desk.
3. Jack Mawben prides himself on hiring quality workers who require little supervision. As office manager, Jack gives his employees full discretion over their tasks and has seen no reason to perform independent reviews of their work for years.
4. Bill Clark's manager has told him to "reduce overhead" no matter what! Bill decides to raise the deductible on the plant's property insurance from $5,000 to $10,000. This cuts the property insurance premium in half. In a related move, he decides that bonding of the plant's employees is really a waste of money since the company has not experienced any losses due to employee theft. Bill saves the entire amount of the bonding insurance premium by dropping the bonding insurance.
5. Catherine Young records all incoming customer cash receipts for her employer and also posts the customer payments to their accounts.