Complete Case 5-2 Internal Controls at the end of Chapter 5 under the Cases section (page 232).

Case 5-2 Internal controls The following is an excerpt from a conversation between two sales clerks, Tracy Rawlin and Jeff Weimer. Both Tracy and Jeff are employed by Magnum Electronics, a locally owned and operated electronics retail store. Tracy: Did you hear the news? Jeff: What news? Tracy: Bridget and Ken were both arrested this morning. Jeff: What? Arrested? Youre putting me on! Tracy: No, really! The police arrested them first thing this morning. Put them in handcuffs, read them their rightsthe whole works. It was unreal! Jeff: What did they do? Tracy: Well, apparently they were filling out merchandise refund forms for fictitious customers and then taking the cash. Jeff: I guess I never thought of that. How did they catch them? Tracy: The store manager noticed that returns were twice that of last year and seemed to be increasing. When he confronted Bridget, she became flustered and admitted to taking the cash, apparently over $15,000 in just three months. Theyre going over the last six months transac-tions to try to determine how much Ken stole. He apparently started stealing first. Suggest appropriate control procedures that would have prevented or detected the theft of cash.

The following are things to consider when responding ton Case Study 5-2 Internal Controls:

Internal controls are usually developed and put into place to either prevent mistakes (or theft) or detect mistakes (or theft) on a timely basis, if they occur. In this case, what are some best practices that could be performed on a routine basis, to help protect cash within this business?

What type of internal controls would apply to a merchandising company, such as Magnum Electronics, mentioned in this case?

Who are some of the people that would possibly perform each internal control? For example, what department would the person that completes bank reconciliations work in?

Why do you suppose Bridget and Ken were arrested, opposed to just being fired?

What kind of sources to possibly use:

A business article, online journal or source from the online library at NAU; highlighting how to handle internal controls of cash, cash management, and loss prevention.