You are a consultant for several companies. The following are several independent situations you have discovered, each of which may or may not have one or more internal control weaknesses. The names of the companies have been changed to protect the innocent.

(a) In Company A, one employee is responsible for counting and recording all the receipts (remittances) received in the mail from customers paying their accounts.

Customers usually pay by check, but they occasionally mail cash. Every day, after the mail is delivered, this employee opens the envelopes containing payments by customers. She carefully counts all remittances and places the checks and cash in a bag.

She then lists the amount of each check or cash received and the customer’s name on a sheet of paper. After totaling the cash and checks received, she records the receipts in the company’s accounts, endorses the checks in the company’s name, and deposits the checks and cash in the bank.

(b) Company B has purchased several programmable calculators for use by the office and sales employees. So that these hand calculators will be available to any employee who needs one, they are kept in an unlocked storage cabinet in the office.

Anyone who takes and uses a calculator “signs out” the calculator by writing his or her name on a sheet of paper posted near the cabinet. When the calculator is returned, the employee crosses out his or her name on the sheet.

(c) Company C owns a van for deliveries of sales to customers. No mileage is kept of the deliveries, although all gas and oil receipts are carefully checked before being paid. To advertise the store, Company C printed two signs with the store’s name and hung one on each side of the van. These signs are easily removable so that the van can be periodically cleaned without damaging the signs. The company allows employees to borrow the van at night or on the weekends if they need the van for personal hauling. No mileage is kept of the personal hauling, but the employee who borrowed the van must fill the gas tank before returning the van.

(d) Employee Y is in charge of employee records for Company D. Whenever a new employee is hired, the new employee’s name, address, salary, and other relevant information are properly recorded. Every payday, all employees are paid by check.

At this time Employee Y makes out each employee's check, signs it, and gives it to each employee. After distributing the paychecks, Employee Y makes an entry in the company’s accounts, increasing Salaries Expense and decreasing Cash for the total amount of the salary checks.

(e) To reduce paperwork, Company E places orders for purchases of inventory from suppliers by phone. No purchase order is prepared. When the goods arrive at the company, they are immediately brought to the sales floor. An employee then authorizes payment based on the supplier's invoice, writes and signs a check, and mails payment to the supplier. Another employee uses the paid invoice to record the purchase and payment in the company’s accounts.

(f) All sales made by Company F, whether they are for cash or on account, are “rung up” ona single cash register. Employee X is responsible for collecting the cash receipts from sales and the customer charge slips at the end of each day. The employee carefully counts the cash, preparing a “cash receipts” slip for the total. Employee X sums the amount on the cash receipts slip and the customer charge slips, and compares this total with the total sales on the cash register tape to verify the total sales for the day. The cash register tape is then discarded, and the cash is deposited in the bank. The cash receipts slip and the customer charge slips are turned over to a different employee, who records the cash and credit sales in the company’s accounts.

Required: (1) List the internal control weakness or weaknesses you find in each of the preceding independent situations. If no weakness can be found, explain why the internal control is good.

(2) In each situation in which there is an internal control weakness, describe how you would remedy the situation to improve the internal control. TK-1