PB5-1 (Static) Identifying Internal Control Principles in Cash Receipts and Disbursements [LO 5-3]

The following procedures are used by Complete Wholesale Incorporated (CWI).

1. All sales are made on account, with each sale being indicated on a sequentially numbered sales invoice.
2. A cashier deposits all customer checks received in the mail, but entries in the customer records are made only by the accounting department.
3. The office receptionist is given the job of handling all customer complaints.
4. When a customer has a legitimate complaint about goods sold to the customer on account, the receptionist will send a credit memo to the accounting department to request that the customers account be reduced.
5. The companys inventory is stored in a locked warehouse that is monitored by surveillance cameras.
6. Payments to the companys suppliers are made only after the invoice from the supplier is compared to the receiving report prepared by CWIs warehouse personnel.

Required:

1. For each statement (a)(f), identify the internal control principle being applied. 2. CWI suspects customer account balances are being reduced for fraudulent reasons, so it will ask one of its employees to review all customer account reductions to ensure they were appropriate. For this review to be considered independent verification, should this responsibility be given to (a) the accounting department, (b) the receptionist, or (c) the cashier?