(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated Procedure Weakness Principle Violated 1 Each store manager is responsible for interviewing applicants for cashier jobs They are hired if they seem honest and trustworthy The accountant should not handle cash Cashiers are not bonded and background checks are not conducted Inability to establish responsibility for cash on a specific clerk Cash is not adequately protected from theft Cash is not independently counted Segregation of duties Independent internal verification Establishment of responsibility Documentation procedures Physical controls Human resource controls 2 All over the counter receipts are registered by three clerks who share a cash register with a single cash drawer Cash is not independently counted The accountant should not handle cashInability to establish responsibility for cash on a specific clerk Cashiers are not bonded and background checks are not conducted Cash is not adequately protected from theft Physical controls Independent internal verification Segregation of duties Documentation procedures Establishment of responsibility Human resource controls 3 To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attach case in the stock room until it is deposited in the bank Inability to establish responsibility for cash on a specific clerk Cash is not adequately protected from theft Cash is not independently counted The accountant should not handle cash Cashiers are not bonded and background checks are not conducted Documentation procedures Human resource controls Establishment of responsibility Physical controls Independent internal verification Segregation of duties 4 At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total The accountant should not handle cash Cashiers are not bonded and background checks are not conducted Cash is not independently counted Inability to establish responsibility for cash on a specific clerk Cash is not adequately protected from theft Human resource controls Documentation procedures Independent internal verification Establishment of responsibility Segregation of duties Physical controls 5 The company accountant makes the bank deposit and then records the days receipts Cash is not independently counted Inability to establish responsibility for cash on a specific clerk The accountant should not handle cash Cashiers are not bonded and background checks are not conducted Cash is not adequately protected from theft Establishment of responsibility Segregation of duties Physical controls Human resource controls Documentation procedures Independent internal verification

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(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. Procedure Weakness Principle Violated 1. Each store

(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated.

Procedure		Weakness	Principle Violated
1.	Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy.	The accountant should not handle cash/ Cashiers are not bonded and background checks are not conducted/ Inability to establish responsibility for cash on a specific clerk/ Cash is not adequately protected from theft/ Cash is not independently counted	Segregation of duties/ Independent internal verification/ Establishment of responsibility/ Documentation procedures/ Physical controls/ Human resource controls

2.	All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.	Cash is not independently counted/ The accountant should not handle cashInability to establish responsibility for cash on a specific clerk/ Cashiers are not bonded and background checks are not conducted/ Cash is not adequately protected from theft	Physical controls/ Independent internal verification/ Segregation of duties/ Documentation procedures/ Establishment of responsibility/ Human resource controls

3.	To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attach case in the stock room until it is deposited in the bank.	Inability to establish responsibility for cash on a specific clerk/ Cash is not adequately protected from theft/ Cash is not independently counted/ The accountant should not handle cash/ Cashiers are not bonded and background checks are not conducted	Documentation procedures/ Human resource controls/ Establishment of responsibility/ Physical controls/ Independent internal verification/ Segregation of duties

4.	At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.	The accountant should not handle cash/ Cashiers are not bonded and background checks are not conducted/ Cash is not independently counted/ Inability to establish responsibility for cash on a specific clerk/ Cash is not adequately protected from theft	Human resource controls/ Documentation procedures/ Independent internal verification/ Establishment of responsibility/ Segregation of duties/ Physical controls

5.	The company accountant makes the bank deposit and then records the days receipts.	Cash is not independently counted/ Inability to establish responsibility for cash on a specific clerk/ The accountant should not handle cash/ Cashiers are not bonded and background checks are not conducted/ Cash is not adequately protected from theft	Establishment of responsibility/ Segregation of duties/ Physical controls/ Human resource controls/ Documentation procedures/ Independent internal verification