Brief Exercise 7-6

Catt Company has the following internal control procedures over cash disbursements.

Identify the internal control principle that is applicable to each procedure.

(a)	Company checks are prenumbered.	Independent internal verificationDocumentation proceduresSegregation of dutiesHuman resource controlsPhysical controlsEstablishment of responsibility
(b)	The bank statement is reconciled monthly by an internal auditor.	Documentation proceduresEstablishment of responsibilityHuman resource controlsSegregation of dutiesIndependent internal verificationPhysical controls
(c)	Blank checks are stored in a safe in the treasurers office.	Physical controlsSegregation of dutiesIndependent internal verificationEstablishment of responsibilityHuman resource controlsDocumentation procedures
(d)	Only the treasurer or assistant treasurer may sign checks.	Documentation proceduresPhysical controlsIndependent internal verificationEstablishment of responsibilitySegregation of dutiesHuman resource controls
(e)	Check-signers are not allowed to record cash disbursement transactions.	Segregation of dutiesIndependent internal verificationHuman resource controlsEstablishment of responsibilityDocumentation proceduresPhysical controls

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