Empire Oil Company, an integrated oil company, operates throughout the United States.

Empire's treasury department is made up of two sections. One section handles cash receipts, and one section handles cash disbursements. The internal audit department approves all disbursements and reconciles all bank accounts.

Cash (includes currency, checks and bank drafts) may be received in one of the following two ways:

1. In the home office directly from the customer.

2. In any one of 45 lockboxes maintained at various depository banks throughout the United States.

With regard to cash received in the home office, the mailroom forwards all mail addressed to the treasury department directly to the cash receipts section of that department unopened. Mail received with no department designation is opened by the mail room personnel. Any of this mail which contains cash is then forwarded directly to the cash receipts section.

With respect to cash received at lockboxes, the respective banks credit Empire's account and forward all remittance advices and a detail listing showing the amount and from whom the cash was received directly to the cash receipts section of the treasury department daily.

On receipt of the cash from the mailroom and data from the depository banks, the cash receipts section prepares a four-part form showing the date cash was received, the party from whom received and the amount. After running an adding machine tape of the amounts and numbering the forms consecutively by day, one copy is furnished to the internal auditors who use it in connection with their bank reconciliations and the original and two copies are sent to the appropriate accounting sections (production and pipeline accounting, refining accounting, marketing accounting, etc.). These sections insert the general ledger account to be credited and return one copy to the cash receipts section. The accounting sections then see that the proper accounts are credited in the subsidiary ledgers (e.g., retail accounts receivable, for example).

The cash receipts section, upon receipt of the copies from the accounting sections, combines the copies with the remittance advices to make up the daily cash receipts vouchers. The vouchers are then forwarded to the computer department where the data are keypunched and fed into the system generating the general ledger.

Required: Evaluate the company's internal control over cash receipts transactions and indicate your recommendations for improvement.