Identify which control activity is violated in each of the following situations, and explain how

the situation creates an opportunity for a fraud.

1. The person with primary responsibility for reconciling the bank account and making all bank

deposits is also the company's accountant.

2. Wellstone Company's treasurer received an award for distinguished service because he had not

taken a vacation in 30 years.

3. In order to save money on order slips and to reduce time spent keeping track of order slips, a

local bar/restaurant does not buy pre-numbered order slips.

Action Plan

Familiarize yourself with each of the control activities listed.

Understand the nature of the frauds that each control activity is intended to address.

SOLUTION

1. Violates the control activity of segregation of duties. Recordkeeping should be separate from