Edward Thompson, a longtime employee of a small grocery wholesaler, is responsible for maintaining the company’s cash records and for opening the daily mail, through which the company receives about 40 percent of its daily cash receipts. Virtually all cash received by mail is in the form of checks made payable to the company. Thompson is also responsible for preparing deposits of currency and checks for the bank at the end of each day.
Required:
1. Explain briefly how Thompson might be able to steal some of the company’s cash receipts.
2. What internal control procedures would you recommend to prevent this theft?