CH 7 ACTIVITY-INTERNAL CONTROLS An internal control system consists of policies and procedures used to protect...

 

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CH 7 ACTIVITY-INTERNAL CONTROLS An internal control system consists of policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and promote adherence to company policies. It is important that companies assess risks of workplace fraud. Managers/owners should also possess skills to identify workplace fraud and consequently establish INTERNAL CONTROLS to effectively minimize risks of fraud. 1. For each of the following five separate cases: A. Identify the ONE PRINCIPLE OF INTERNAL CONTROL which has been violated. B. Recommend ACTION(S) the company could take to ENHANCE INTERNAL CONTROLS. Scenario 1: Latisha Tally is the company's computer specialist and oversees its computerized payroll system. Her boss recently asked her to put password protection on all office computers. Latisha has put a password in place that allows only the boss access to the file where pay rates are changed and personnel are added or deleted from the payroll. Scenario 2: Marker Theater has a computerized order-taking system for its tickets. The system is active all week and backed up every Friday night. Scenario 3: Sutton Co. has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise. Scenario 4: The owner of Super Pharmacy uses a check protector to perforate checks, making it difficult for anyone to alter the amount of the check. The check protector is on the owner's desk in an office that contains company checks and is normally unlocked. CH 7 ACTIVITY-INTERNAL CONTROLS An internal control system consists of policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and promote adherence to company policies. It is important that companies assess risks of workplace fraud. Managers/owners should also possess skills to identify workplace fraud and consequently establish INTERNAL CONTROLS to effectively minimize risks of fraud. 1. For each of the following five separate cases: A. Identify the ONE PRINCIPLE OF INTERNAL CONTROL which has been violated. B. Recommend ACTION(S) the company could take to ENHANCE INTERNAL CONTROLS. Scenario 1: Latisha Tally is the company's computer specialist and oversees its computerized payroll system. Her boss recently asked her to put password protection on all office computers. Latisha has put a password in place that allows only the boss access to the file where pay rates are changed and personnel are added or deleted from the payroll. Scenario 2: Marker Theater has a computerized order-taking system for its tickets. The system is active all week and backed up every Friday night. Scenario 3: Sutton Co. has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise. Scenario 4: The owner of Super Pharmacy uses a check protector to perforate checks, making it difficult for anyone to alter the amount of the check. The check protector is on the owner's desk in an office that contains company checks and is normally unlocked.

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Scenario 1 Deficiency There is no segregation of duties Only manager has right to access the pa... View the full answer