CH 7 ACTIVITY - INTERNAL CONTROLS 2 An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. It is important that companies assess their risks of workplace fraud which includes assessing INTERNAL CONTROLS and devising ways to remedy the lack thereof. 1. For each of the following three cases: A. Identify ONE PRINCIPLE OF INTERNAL CONTROLS which has been violated. B. Recommend what ACTION(s) the company should take to remedy this situation. Scenario 1: In order to save money, Regal Co. has decided to drop its property insurance on assets and to stop bonding the cashiers who handle less than $10,000 in cash each day. Scenario 2: Wang Co. records each sale on pre-numbered invoices. These invoices are left in an open drawer for any employee to access. No employee at Wang Co. examines and records whether all the invoices are accounted for after employees take them from the open drawer. Scenario 3: Gerald McNichols, the owner of McNichols Co., prides himself on hiring only the most competent employees. McNichols believes that since these employees are highly competent and that he trusts them completely and wants to keep employee morale high, there is no need for anyone to review the employee's performance