A-1 Machines is located in Saskatoon, Saskatchewan, with a sales territory covering the province.

The company has established a large petty cash fund to handle small cash payments and cash advances to its salespeople to cover frequent sales trips.

The controller, Margaret Hamm, has decided that two people (Anne Bloom and Tom Hurry) should be in charge of the fund as money is often needed when one person may be out for coffee or lunch. Hamm also feels this will increase internal control, as the work of one person will serve as a check on that of the other.

Regular small cash payments are handled by either Bloom or Hurry, who make the payment and have the person receiving the money sign a sheet of paper listing the date and reason for the payment. Whenever a salesperson requires an advance for a trip, he or she simply signs a receipt for the money received. The salesperson later submits receipts for the cost of the trip to either Bloom or Hurry to offset the cash advance.

Hamm is puzzled that the fund is almost always out of balance and either over or short.

Required :Comment on the internal control procedures of A-1 Machines. Suggest changes that you think would improve the system.

Bloom and Hurry (Both, indiviudally) have access to the petty cash fund, leaving (Bloom and Hurry, No one,) responsible for the fund. This is a lack of (Documentation, job rotation, authorization, separation of duties)

A signature along with a note for the amount and reason for payment is an(Excellent, insufficant) way to validate expenses. Actual receipts (Should not, should) be required. Petty cash tickets(Should, Should not) be included as an internal control mechasism with the receipts (Attached, not required) this is a lack of (Proper Documentation, job rotation, authorization, separation of duties)

Salespeople simply request funds and produce receipts for cost incurred. there (are, are no) checks completed to esnure that all the expenses are for business purposes. the sales manager (Should, should not) review all the expenses and provide (Authorization, the funds). this is a lack of (Proper Documentation, job rotation, authorization, separation of duties)

The fund (Should, should not) be used for this purpose. sales staff should (be, not be) responsible for expenses and (Then be reimbursed, use the petty cash money) for the costs once approved by the sales manager. Petty cash is normally for (Unexpected small cash outlays , sales expense)