Cedar Grove High School wants to raise money for a new sound system for its auditorium. The main fundraising event is a dance at which the famous disc jockey Obnoxious Al will play rap music. Roger DeMaster, the music teacher, has been given the responsibility for coordinating the fundraising efforts. This is Roger's first experience with fundraising. He decides to put the Student Representative Council (SRC) in charge of the event.

Roger had 500 unnumbered tickets printed for the dance. He left the tickets in a locked box on his desk and told the SRC students to take as many tickets as they thought they could sell for $20 each. To ensure that no extra tickets would be floating around, he told the students to get rid of any unsold tickets. When the students received payment for the tickets, they were to bring the cash back to Roger, and he would put it in the locked box on his desk.

Some of the students were responsible for decorating the gymnasium for the dance. Roger gave each of them a key to the locked box and told them that if they took money out to purchase materials, they should put a note in the box saying how much they took and what it was used for. After two weeks, the locked box appeared to be getting full, so Roger asked Praveen Patel to count the money, prepare a deposit slip, and deposit the money in a bank account Roger had opened.

The day of the dance, Roger wrote a cheque from the account to pay Obnoxious Al. Al, however, said that he accepted only cash and did not give receipts. Having no alternative, Roger took $500 out of the locked box and gave it to Al. At the dance, Roger had Sara Wu working at the entrance to the gymnasium, collecting tickets from students and selling tickets to those who had not pre-purchased them. Roger estimated that 400 students attended the dance.

The following day, Roger closed out the bank account, which had $750 in it, and gave that amount plus the $1,800 in the locked box to Principal Orlowski. Principal Orlowski seemed surprised that, after generating roughly $8,000 (400 tickets @ $20) in sales, the dance netted only $2,550 in cash. Roger did not know how to respond.

Instructions

(a) Identify the control weaknesses over cash receipts and payments and the problems that could occur because of these weaknesses.

(b) List the improvements in control activities that the school should consider.