MEI Distributors is located in Moncton, New Brunswick, with a sales territory covering the Maritime provinces and Newfoundland. Employees live in New Brunswick and all report to work at the company's offices in Moncton.
The company has established a large petty cash fund to handle cash payments and cash advances to its salespeople to cover trips to and from New Brunswick on sales calls.
The controller, Jelisa Valji, has decided that two people (Sarah Wong and Martha Dekinder) should be in charge of the petty cash fund, since money is often needed when one person is out of the office. Valji also feels this will increase internal control, because the work of one person will serve as a check on that of the other.
Regular small cash payments are handled by either Wong or Dekinder, who make the payment and have the person receiving the money sign a sheet of paper giving the date and reason for the payment. Whenever a salesperson requires an advance for a sales trip, that person simply signs a receipt for the money received. The salesperson later submits receipts covering the costs incurred to either Wong or Dekinder to offset the cash advance.
Valji, a family friend as well as the controller, doesn't think the system is working and, knowing you are studying accounting, has asked for your advice.
Required
Write a memo to Valji commenting on the internal control procedures of MEI. Suggest changes that you think would improve the system.