A company's system of internal control (which consists of accounting and administrative controls) is strengthened by including in the system procedures that have specific functions or purposes. For example, the system of internal control may include a voucher system that provides for all invoices to be checked for accuracy, approved for propriety, and recorded before being paid. The system reduces the likelihood that an invoice will be mislaid or the discount lost, and it provides assurance that improper or unauthorized disbursements are not likely to be made.

Required:

Give the purposes or functions of each of the following procedures or techniques that may be included in a system of internal control, and explain how each purpose or function is helpful in strengthening accounting and administrative internal control.

a. Fidelity bonding of employees.

b. Budgeting of capital expenditures.

c. Listing of mail remittances by the mail department when the mail is opened.

d. Maintaining a plant ledger for fixed assets.