Each of the following independent situations has an internal control weakness:

1. Henrys Lawn Care Service provides residential grass cutting services for a large number of clients

who all pay cash. Henry collects the cash and keeps it in the glove compartment of his car until the

end of the week, when he has time to count it and prepare a bank deposit.

2. Tasty Treats sells a variety of items including ice cream, pop, and other snack foods. A long-term

employee is responsible for ordering all merchandise, checking all deliveries, and approving

invoices for payment.

3. At Pops Pizza, there are three sales clerks on duty during busy times. All three of them use the same cash drawer.

4. Most customers at Ultimate Definition TVs use the option to pay for their televisions in 24 equal

payments over two years. These customers send the company cheques or cash each month. The

office manager opens the mail each day, makes a bank deposit with the cheques received in the mail

that day, and prepares and posts an entry in the accounting records.

5. Trends Incorporated manufactures celebrity posters for teenagers. Naiara Mann is the custodian of

the companys $500 petty cash fund. The fund is replenished every week. Frequently people do not

have a receipt for their expenses because of things like parking meter expenses. In this case, Naiara

just creates a receipt for that person and gives them their cash. Naiara has been with the company

for 15 years and is good friends with many of the employees. Naiara is very hard-working and never

takes a vacation.

Instructions

A. Identify the internal control weaknesses in each situation.

B. Explain the problems that could occur as a result of these weaknesses.

C. Make recommendations for correcting each situation.