You are auditing the Alaska Branch of Far Distributing Co. This branch has substantial annual sales which are billed and collected locally. As a part of your audit you find that the procedures for handling cash receipts are as follows:

Cash collections on over-the-counter sales and C.O.D. sales are received from the customer or delivery service by the cashier. Upon receipt of cash the cashier stamps the sales ticket "paid" and files a copy for future reference. The only record of C.O.D. sales is a copy of the sales ticket which is given to the cashier to hold until the cash is received from the delivery service.

Mail is opened by the secretary to the credit manager and remittances are given to the credit manager for his review. The credit manager then places the remittances in a tray on the cashier's desk. At the daily deposit cut-off time the cashier delivers the checks and cash on hand to the assistant credit manager who prepares remittance lists and makes up the bank deposit which he also takes to the bank. The assistant credit manager also posts remittances to the accounts receivable ledger cards and verifies the cash discount allowable.

You also ascertain that the credit manager obtains approval from the executive office of Far Distributing Co., located in Chicago, to write off uncollectible accounts, and that he has retained in his custody as of the end of the fiscal year some remittances that were received on various days during the last month.

Required:

a. Describe the irregularities that might occur under the procedures now in effect for handling cash collections and remittances.

b. Give procedures that you would recommend to strengthen internal control over cash collections and remittances.