1. Below find two lists. The first list is errors or problems which might occur in the processing of cash transactions. The second one is a list of internal control principles. Evaluate each possible error and cite a principle from the second list that would reduce the probability of the error occurring. Choose the most correct one (12 points).

Possible Errors or Problems

1. A purchase clerk regularly orders accessories for personal use. These orders always cost less than $1,000. The company requires authorization only for purchase orders above $1,000.
2. A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account.
3. A newly recruited sales clerk either forgets to enter the discount value or enters an incorrect value of discount.
4. Each cashier counts his own register drawer each day and verbally reports the results to the supervisor.

Internal Control Principles

1. Establishment of responsibility
2. Segregation of duties
3. Backup and contingency planning
4. Documentation procedures
5. Independent internal verification
6. Human resource controls