A local cafe, which stocks toys for children, provides each customer with a charge ticket that allows them to order any food item and purchase any toy while they are at the cafe, and are required to pay when they leave. However, there have been instances where employees have issued a charge ticket but did not input the charges into the cash machine and collected cash. In such instances no record of revenue was recorded.

The cafe owners installed video cameras as an internal control to ensure such fraud does not occur.

All cash is banked in regularly and checked against the amount recognized in the till. If there are any discrepancies between the till and the amount banked in, the amounts will be docked from the employee's salary. It was also found that the initial inventory, which was purchased when the cafe was setup, was missing but was subsequently written off.

The books are kept on excel and are prepared on an annual basis.

The cafc is intending on renovating the place to install new indoor activities. It also has an outdoor place where they also intend to design some outdoor activities for the children. Given you have been appointed as the auditors, you have also been asked to recommend any improvements on internal controls over cash admission fees and other aspects of the business.

Required:

a. Indicate the weaknesses in their processes over cash admission fees that should be identified and recommend one improvement for each of the weaknesses identified. Organize the answer as indicated in the following illustrative example.

Weaknesses in Processes Recommendation

1. There is no basis for establishing the number of paying patrons. 1. Renumbered admission tickets should be issued upon payment of the admission fee.

b. Indicate which of the weaknesses, if any, increase the likelihood of misappropriation of assets.

c. Indicate which of the weaknesses, if any, increase the likelihood of fraudulent financial reporting.