(Learning Objectives 2: Identifying internal control weakness in sales and cash receipts) Fresh Skin Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of the sale. Kate Martin opens envelopes and separates the cheques from the accompanying remittance advices. Martin forwards the cheques to another employee, who makes the daily bank deposit but has no access to the accounting records. Martin sends the remittance advices, which show the amount of cash received, to the accounting department for entry in the accounts receivable. Martin’s only other duty is to grant allowances to customers.

(An allowance decreases the amount that the customer must pay.) When Martin receives a customer cheque for less than the full amount of the invoice, she records the allowance in the accounting records and forwards the document to the accounting department.

❙ Requirement 1. You are a new employee of Fresh Skin Care. Write a memo to the company president identifying the internal control weakness in this situation. State how to correct the weakness.