Question
9-20 (OBJECTIVES 9-2, 9-6) The Art Appreciation Society operates a museum tor the benefit and enjoyment of the community. When the museum is open to
9-20 (OBJECTIVES 9-2, 9-6) The Art Appreciation Society operates a museum tor the benefit
and enjoyment of the community.
When the museum is open to the public, two clerks who are positioned at the entrance col-
lect a $10.00 admission fee from each nonmember patron. Members of the Art Appreciation
Society are permitted to enter free of charge upon presentation of their membership cards. At the end of each day, one of the clerks delivers the proceeds to the treasurer. The
treasurer counts the cash in the presence of the clerk and places it in a sate. Each Friday
atternoon, the treasurer and one of the clerks deliver all cash held in the sate to the bank
and receive an authenticated deposit slip that provides the basis for the weekly entry in the
accounting records.
The Art Appreciation Society board of directors has identified a need to improve Its
internal controls over cash admission fees. The board has determined that the cost of in-
stalling turnstiles, sales booths, or otherwise altering the physical layout ot the museum
will greatly exceed any benefits. However, the board has agreed that the sale of admission
tickets must be an integral part of its improvement ettorts.
Smith has been asked by the board of directors of the Art Appreciation Society
to review the internal control over cash admission fees and provide suggestions for
improvements.
a. Indicate Weaknesses in their processes over cash admission tees that Smith should
identity, and recommend one improvement for each of the weaknesses identitied.
Organize the answer as indicated in the tollowing illustrative example.*
Weaknesses in Processes
1. There is no basis for establishing the
number of paying patrons.
Required
1. Prenumbered admission tickets
should be issued upon payment of
the admission tee.
b. Indicate which of the weaknesses, it any, increase the likelihood of misappropriation
of assets.
c. Indicate which of the weaknesses, if any, increase the likelihood of fraudulent finan-
cal reporting.
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