(Thinking about internal controls, LO 1) For the following two scenarios, describe what you think are the weaknesses in the internal controls and explain the implications of the weaknesses:

a. A travelling amusement park hires people in the towns the park visits to operate the rides on the midway. A person hired is given full responsibility for the ride.

Responsibility includes collecting cash from the people who want to take the ride, making sure people get on and off the rides safely, and operating the ride. At the end of the day the person gives the cash collected from customers over to the park manager.

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 had been ordered are received, autho- rizing 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.