Fach of the following situations reveals an internal control weakness (Click on the icon to view the situations.) Requirements 1. Identify the missing internal control characteristic in each situation 2. Identify each organization's possible problem, 3. Propose a solution to the problem Situations Situation a. Tom Dickens has been an employee of the city of Fulton for many years Because the city is small, Dickens performs all of its accounting duties, in addition to opening the mail and preparing bank deposits and bank reconciliations Requirement 1. Missing Control Characteristic Requirement 2. Possible Problem Requirement 3. Potential Solution Situation b. A purchasing agent for Sampson Manufacturing is responsible for buying diamonds for use in the company's manufacturing process, approving the invoices for payment and signing the checks No supervisor reviews the purchasing agent's work Requirement 1. Missing Control Characteristic Requirement 2. Possible Problem Requirement 3. Potential Solution Situation a. Tom Dickens has been an employee of the city of Fulton for many years. Because the city is small, Dickens performs all of its accounting duties, in addition to opening the mail and preparing bank deposits and bank reconciliations. Situation b. A purchasing agent for Sampson Manufacturing is responsible for buying diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. Situation c. Pam Silk owns an architectural firm. Silk's staff consists of 19 professional architects, and Silk manages the office. Often, her work requires her to travel to meet with clients. During the past six months, Silk has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. She learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office. Print Done Situation c. Pam Silk owns an architectural firm Sik's staff consists of 19 professional architects, and Silk manages the office. Often, her work requires her to travel to meet with clients. During the past six months, Silk has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. Silk learns that when she is away, two of her senior architects take over office management and neglect their normal duties One employee could manage the office Requirement 1. Missing Control Characteristic Requirement 2. Possible Problem Requirement 3. Potential Solution Requirement 1. Missing Control Characteristic Requirement 2. Possible Problem: Requirement 3. Potential Solution: ituation b. A purchasing agent for Sampson Ma me invoices for payment, and signing the checks. Assignment of responsibility Competent personnel Inappropriate documents Internal audit Proper authorization Separation of duties diamonds for use j agent's work. equirement 1. Missing Control Characteristic: mequirement 2. Possible Problem: uirement 2. Possible Problem: uirement 3. Potential Solution: Lost profits lation b. A purchasing agent for s invoices for payment, and signing Lost revenues is respc sor revi Theft of cash uirement 1. Missing Control Charactersuc. rement 3. Potential Solution: ion b. A purchasing agent for 3 oices for payment, and signing rement 1. Missing Control Ch Hire a security guard. Install a surveillance camera. Keep accounting and cash handling duties separate. rement 2. Possible Problem: equirement 1. Missing Control Characteristic: equirement 2. Possible Problem: Assignment of responsibility equirement 3. Potential Solution Competent personnel Inappropriate documents arch ituation c. Pam Silk owns an architectural firm travel to meet with clients. During the past six n ave not progressed satisfactorily. Silk learns that uties. One emplovee could manage the office. Internal audit her arch Proper authorization ck to select your answer(s). Separation of duties irement 2. Possible Problem: irement 3. Potential Solution: Lost profits due to inefficiency tion c. Pam Silk owns an archit Lost revenues due to low-quality work wel to meet with clients. During 1 not progressed satisfactorily. Si Theft of cash or diamonds . One emplovee could manade me ume ial a n sh or ar hent 3. Potential Solution: ilk I bus c. Pam Silk owns an archit o meet with clients. During 1 progressed satisfactorily. Si ne emplovee could manage Fire the purchasing agent. Separate purchasing, approval, and check signing duties. er o
