Caulfield East Recreation Centre is a fitness centre equipped with an indoor swimming pool, exercise equipment and an aerobics area. The Centre is open seven days a week, from 8:00 A.M. to 10:00 P.M. The front desk is just inside the front doors. Employees take turns through the day to work at the front desk to check people coming to the Centre. People must either show their membership card in order to enter, or they must pay $8 for a visit. When a customer pays cash to visit they also have to sign a waiver form that says they are aware of the risks doing exercise and will not sue the Centre if they hurt themselves. The front desk employee deposits cash in a locked box and files the waiver form.

At the end of each day the Recreation Centres accountant collects the cash box, opens it, removes the cash and counts it. The accountant then gives a receipt for the cash amount to the front desk employee who puts it in the cash box and deposits the cash in the Recreation Centres bank account the following morning. Then the accountant makes an entry in the cash receipts journal for the amount indicated on the bank deposit slip.

The Recreation Centre Manager has some concerns about the internal controls over cash, but is worried that additional controls will not provide a cost benefit. The Manager engages you as an external auditor to review the existing internal control procedures and to make some suggestions for improvement.

a) Identify and explain four (4) weaknesses in the internal controls over cash admission fees described above.

b) Recommend one (1) improvement for each weakness you identified.