Question 1

For each the following situations, evaluate the segregation of duties and describe any deficiency that you found. Indicate possible error that might occur because of the inadequate segregation of duties. Recommend the additional control that should be implement by the company.

Situations:

g. The employees of Americana TV and Appliance are paid based on their performance in generating profitable sales for the company. Each salesperson has the ability to determine a sales price (within specified but very broad parameters). Once a sales price has been negotiated with the customer, an invoice is prepared. At the close of the day, the salesperson looks up the cost of the merchandise on a master price list. The salesperson then enters the cost of the merchandise on the copy of the invoice and submits it to accounting for data entry and processing. The salesperson's commission is determined by the gross margin realized on sales.