(Learning Objectives 1, 2: Learning about fraud; identifying internal control weaknesses) Identify the internal control weakness in the following situations. State how the person can hurt the company.

a. James Mason works as a security guard at SAFETY parking in Budapest. Mason has a master key to the cash box where customers pay for parking. Each night Mason prepares the cash report that shows

(a) the number of cars that parked on the lot and

(b) the day’s cash receipts. Louise Carrington, the SAFETY treasurer, checks Mason’s fi gures by multiplying the number of cars by the parking fee per car. Carrington then deposits the cash in the bank.

b. Elizabeth Fleming is the purchasing agent for Marshfi eld Golf Equipment. Fleming prepares purchase orders based on requests from division managers of the company.

Fleming faxes the purchase order to suppliers who then ship the goods to Marshfi eld.

Fleming receives each incoming shipment and checks it for agreement with the purchase order and the related invoice. She then routes the goods to the respective division managers and sends the receiving report and the invoice to the accounting department for payment.