Internal Controls

Madonna Epstein has recently been hired as the manager of Beans Coffee Shop. Beans Coffee Shop is a national chain of franchised coffee shops. During her first month as store manager, Madonna encountered the following internal control situations:

a. Beans Coffee Shop has one cash register. Prior to Madonna's joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Madonna made one employee on each shift responsible for taking orders and accepting the customer's payment. Other employees prepare the orders.

I with Madonna's method of handling this situation because Madonna has the internal control principle of assignment of responsibility and the internal control principle of segregation of duties.

b. Since only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Madonna expects each cashier to balance the drawer to the penny every timeno exceptions.

I with Madonna's method of handling this situation because Madonna has the internal control principle of segregation of duties.

c. Madonna caught an employee putting a case of 500 single-serving tea bags in her car. Not wanting to create a scene, Madonna smiled and said, "I don't think you're putting those tea bags on the right shelf. Don't they belong inside the coffee shop?" The employee returned the tea bags to the stockroom.

I with Madonna's method of handling this situation because she has the internal control principle of safeguarding of assets.