High Tech Inc. commenced operations recently. Two friends from university, John Deol and Rehana Gerdman, jointly own the company's shares. John and Rehana have developed a new soft ware application to track shipping. The two friends spend most of their time on the development of new products and the marketing of the current product.

John and Rehana hired Fred Glass to be High Tech's controller. Fred has been given overall responsibility for the books and records of High Tech so that John and Rehana can spend their time on development and marketing.

Fred has one assistant, Asmaa. Both Fred and Asmaa have the authority to order goods for High Tech. Asmaa can approve invoices for payment up to $5,000. Fred can approve any invoice for payment. Fred, John, and Rehana are all signing officers on the company's bank account. Only one of the three signing officers needs to sign a cheque under $20,000. For cheques greater than $20,000, two signing officers must sign. Unsigned cheques are kept in the company safe. The safe is kept locked and access to the safe is limited to the signing officers. Fred is responsible for preparing the monthly bank reconciliations and making any necessary journal entries.

Instructions

(a) Identify the control weaknesses over the cash payments and the problems that could occur as a result of these weaknesses.

(b) List the improvements in control activities that High-Tech should consider.