For each of the following independent situation indicate the apparent internal control weaknesses and suggest alternative procedures to eliminate the weaknesses.

1. John Smith is the petty cash custodian. John approves all request for payment out of the 200 fund which is replenished at the end of each month. At the end of each month. John submits a list of all accounts and amounts to be charged and a check is written to him for the total amount. John is the only person ever to tally the fund.

2. All of the company cash disbursement are made by check. Each check must be supported by an approved voucher which is in turn supported by the appropriated invoice and for purchases a receiving document. The vouchers are approved by Dean Leiser the chief accountant after reviewing the supporting documentation. Betty Hanson prepares the checks for Leiser signature. Leiser also maintains the companies check register the cash disbursements journal and reconciles the bank account at the end of each month.

3. Fran Jones opens the company’s mail and makes a listing of all checks and cash received from customer. A copy of the list is sent to Jerry McDonald who maintains the general ledger accounts. Fran prepares and makes the daily deposit at the bank. Fran also maintains the subsidiary ledger for the accounts receivable which is used to generate monthly statements to customer.

Answer rating: 100% (QA)

Weaknesses in the internal control and the alternative procedures to eliminate weaknesses 1 A weakne... View the full answer