Penrith Convenience Store

There are three sales persons in Penrith Convenience Store. Depending on who is the last person working the shift before the closing time, the sales persons counts cash sales at the end of each day and matches it with the batch total printed by POS system. They review the cash sale transactions on the computer and make adjustments and corrections if mistakes are spotted. The cash receipts are batched and filed in the drawer.

All three sales persons have access to this both the receipt drawer and cash drawer. Receipt drawer is not locked but the cash drawer is locked at the end of the day.

Weekly discounts are manually labelled on products every Monday. For these products, sales prices have to be manually entered at checkout. A recent audit found that sales clerks sometimes enter discounted prices for items that are not on sale when the customers are their friends or families.

At 4pm on Wednesday and Friday, the sales persons take turns to take cash from cash sales to deposit in the local bank. The deposit slips are filed in the deposit folder and sent to the accounting department the next Monday. Sales after 4pm on Friday are filed in the following weeks sales.

The accountant receives the bank statements every month and reconciles against the cash sales transactions recorded on the computer. Discrepancies are forwarded to the store manager. The store manager often delegates the correction and explanation to the sales clerks.

At the end of the week, the sales clerk conducts a stock take. Products are near expiry date are discounted, and expired products are thrown away. The sales clerks then update inventory levels accordingly on the computer.

(a) Identify FIVE (5) risks present in the previously listed activities. (1 mark each= 5 marks)

(b) Recommend TWO controls for each of the risks you identified. Explain why the control(s) help mitigate the risks. (3 marks each = 15 marks)

(c) Classify and briefly explain each of the control activities as preventive, detective, or corrective. (1 mark each = 5 marks)