The Art Appreciation Society operates a museum for the

benefit and enjoyment of the community.

When the museum is open to the public, two clerks who are positioned at the entrance

collect a $$5\mathrm{.}00$ admission fee from each nonmember patron. Members of the Art Appreciation

Society are permitted to enter free of charge upon presentation of their membership cards.

At the end of each day, one of the clerks delivers the proceeds to the treasurer. The

treasurer counts the cash in the presence of the clerk and places it in a safe. Each Friday

afternoon, the treasurer and one of the clerks deliver all cash held in the safe to the bank

and receive an authenticated deposit slip that provides the basis for the weekly entry in the

accounting records.

The Art Appreciation Society board of directors has identified a need to improve its

internal controls over cash admission fees. The board has determined that the cost of

installing turnstiles, sales booths, or otherwise altering the physical layout of the museum

will greatly exceed any benefits. However, the board has agreed that the sale of admission

tickets must be an integral part of its improvement efforts.

Smith has been asked by the board of directors of the Art Appreciation Society to review

the internal control over cash admission fees and provide suggestions for improvements.

Required

a $.$ Indicate deficiencies in the existing internal controls over cash admission fees that

Smith should identify, and recommend one improvement for each of the deficiencies

identified. Organize the answer as indicated in the following illustrative example.$*$

Deficiencies

$1.$ There is no basis for establishing

Recommendation

$1.$Prenumbered admission tickets should be issued the number of paying patrons. upon payment of the admission fee.

b $.$ Indicate which of the deficiencies, if any, increase the likelihood of misappropriation

of assets.

c $.$ Indicate which of the deficiencies, if any, increase the likelihood of fraudulent financial

reporting.