Problem C

Six principles of internal control are established of responsibility, segregation of duties, documentation procedures, physical controls, independent internal verification, and human resource controls. For each situation below, indicate (a) the problem caused by the procedures used, (b) which of the six internal control principles are violated, and (c) how to correct the situation.

1. Several sales clerks at the local supermarket use the same cash register drawer.

2. Employees are not required to take annual vacations.

3. Hourly employees do not use a time clock to punch in.

4. Joe Smith and Mary Jones are responsible for writing checks for jungle corporation.

5. Checks are not renumbered.

6. The pre-list of cash receipts is not compared to bank deposit slips.

6. Jay Morgan is responsible for ordering merchandise, receiving the merchandise, and authorizing payment for merchandise received.

8. Checks are handwritten, not machine or computer imprinted.

9. Ellen May writes checks and is also responsible for recording cash payment journal entries.

10. Jethro Bodine opens mail, handles cash and checks received, and is also responsible for recording cash receipt journal entries.