For the following two scenarios, describe what you think are the weaknesses in the internal controls and explain the implications of the weaknesses:

a. The administrative assistant to the corporate controller keeps a cash box with up to

$500 of company money in her desk so that she can pay for incidental expenses as they occur: couriers, reimbursements for expenditures on behalf of the company, food ordered for meetings and people who work late, and so on. The cash is kept in a locked box in a locked drawer in the administrative assistant’s desk. The cash in the box is replaced when the administrative assistant tells the corporate controller that more is required. The administrative assistant has been with the company for over 20 years and is highly respected and trusted by all members of senior management.

b. Because of its small size, Hochelaga Ltd. has only one person, Mathew Jordan, in its accounting department. For accounts payable, Mr. Jordan is responsible for ensuring that goods and services that have been ordered are received, authorizing payments to suppliers, preparing cheques, and entering transactions into the accounting system. He also prepares the bank reconciliation. The owner of the company signs all cheques and frequently reviews Mr. Jordan’s work. The owner is often out of the country on business, sometimes for up to two weeks. Office staff are always aware of when the owner will be returning.