Fluid Controls, Inc., a manufacturing company, has retained you to perform an audit for the year ended December 31. Prior to the year-end, you begin to obtain an understanding of the new clients controls over business processes related to the cash account.

You find that nearly all the companys cash receipts are in the form of checks received through the mail, but there is no prelisting of cash receipts before they are recorded in the accounts. Also, the incoming mail is opened either by the cashier or by the employee maintaining the accounts receivable subsidiary ledger, depending on which employee has time available. The controller stresses the necessity of flexibility in assignment of duties to the 20 employees comprising the office staff, in order to keep all employees busy and achieve maximum economy of operation.

a. Explain how prelisting of cash receipts strengthens internal control.

b. List specific duties that should not be performed by an employee assigned to prelist the cash receipts in order to avoid any opportunity for that employee to conceal embezzlement of cash receipts.