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Case Study Cactus Corporation manufactures and sells several different lines of women clothes. Its internal audit department completed an audit of its internal control process.
Case Study Cactus Corporation manufactures and sells several different lines of women clothes. Its internal audit department completed an audit of its internal control process. The auditors noted the following items: a. A cashier cashed a check from a customer in payment of an account receivable, pocketed the cash, and concealed the theft by properly posting the receipt to the customer's account in the accounts receivable ledger. b. Several customers returned clothing purchases. Instead of putting the clothes into a return bin to be put back on the rack, a clerk put the clothing in a separate bin under some cleaning rags. After her shift, she transferred the clothes to a gym bag and took them home. c. A receiving clerk noticed that four batches of pants were included in a shipment when only three were ordered. The clerk put the extra batch aside and took it home after his shift ended. Required: a. Explain how the principle of separation of duties is violated in each of the following situations. (6 points: 2 points for each item) b. Suggest one solution to solve the problem and exposure highlighted on question (a) for each item. (6 points: 2 points for each item)
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