The cashier of the Easy Company intercepted Customer A’s check payable to the company in the amount of $ 500 and deposited it in a bank account that was part of the company petty cash fund, of which he was custodian. He then drew a $ 500 check on the petty cash fund bank account payable to himself, signed it, and cashed it. At the end of the month while processing the monthly statements to customers, he changed the statement to Customer A so that it showed that A had received credit for the $ 500 check that had been intercepted. Ten days later, he made an entry in the cash received book that purported to record receipt of a remittance of $ 500 from Customer A, thus restoring A’s account to its proper balance but overstating the cash in the bank. He covered the overstatement by omitting from the list of outstanding checks in the bank reconcilement two checks, the aggregate amount of which was $ 500. List what you regard as five important deficiencies in the system of internal control in this situation, and state the proper remedy for each deficiency.
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