INFORMATION

SBG Travel electronically invoices all customers rather than collecting cash when services are provided.

Julie Law, who is an accountant, opens all the inward mail on a daily basis. She does this in order to respond quickly to customers' needs and any other queries or problems they may have.

When she opens the mail, all correspondence is handed over to the Office Manager but all cash remittances are listed by her immediately.

She deposits all cash listed promptly. Then she uses the listing to prepare the cash receipts journal (in MYOB) and to update the Accounts Receivable.

Julie Law's duties also include approving credit, authorising any allowances and writing off bad debt. The Accounting Manager is very happy with her work.

Following a recent audit it was discovered that Julie Law has committed major theft of the company's cash collections. She did not record some sales, and authorised fictitious credits to customers

QUESTION

1. Identify the key Internal Control weaknesses in the Cash system of the business.
2. Develop and document modifications to guidelines/procedures for staff to facilitate organisational compliance with internal control procedures. Note all sources of information accessed and used.