Internal Control Xiley Company encountered the following situations:
a. The person who opens the mail for Xiley, Bill Stevens, stole a check from a customer and cashed
it. To cover up the theft, he debited Sales Returns and Allowances and credited Accounts Receivable in the general ledger. He also posted the amount to the customer's account in the accounts
receivable subsidiary ledger.
b. The purchasing agent, Susan Martin, used a company purchase order to order building materials
from Lumber Mart. Later, she telephoned Lumber Mart and changed the delivery address to her
home address. She told Lumber Mart to charge the material to the company. At month-end, she
approved the invoice from Lumber Mart for payment.
c. Nash Supply Company sent two invoices for the same order: the first on June 10 and the second
on July 20. The accountant authorized the payment of both invoices and both were paid.
d. On January 1, Jack Monty, a junior accountant for Xiley, was given the responsibility of recording all general journal entries. At the end of the year, the auditors discovered that Monty had
made 150 serious errors in recording transactions. The chief accountant was unaware that Monty
had been making mistakes.
Required
For each situation, describe any violations of good internal control procedures and identify the steps that you would take to prevent each situation.