Susan Poe is a trusted employee of National Trust Bank. She is involved in everything. She works as a teller, accounts for cash at the other teller windows, and she records many of the transactions in the accounting records. She never takes a day off, even when she is ill. She routinely works late to see that all the days work is posted into the accounting records. CPAs were hired to perform an audit, the first complete audit the Bank has had performed in several years. Poe seemed somewhat upset by the upcoming audit. She said that everything had been properly accounted for and that the audit was a needless expense. While the CPAs were examining some of the banks internal control procedures, they discovered problems. In fact, as the audit progressed, it became apparent that a large amount of cash was missing. Numerous adjustments had been made to customer accounts with credit memorandums, and many of the transactions had been posted several days late. In addition, there were numerous cash payments for office expenses. When the audit was complete, it was discovered that more than $100,000 of funds was missing or improperly accounted for. All fingers pointed to Poe. The banks President, who was a close friend of Poe, was bewildered. How could this type of thing happen at this bank?

Discuss what internal controls were missing and why it is important for businesses to make sure that they both have and follow internal controls.