Internal Control Procedures

1. Identify and explain the potential internal control weaknesses for each of the following situations. Consider each situation separately.
2. Suggest and explain a potential internal control for each identified internal control weakness.

a)	While reviewing the records of Discount Pharmacy, you find that the same employee orders merchandise and approves invoices for payment.
b)	After the physical count, the storeroom supervisor matches quantities counted against a predetermined reorder level. If the count for a given part is below the reorder level, the supervisor enters the part number on a materials requisition list and sends this list to the accounts payable clerk. The accounts payable clerk prepares a purchase order for a predetermined reorder quantity for each part and mails the purchase order to the vendor from whom the part was last purchased.
c)	The hours worked field in a payroll transaction record contained the value 400 instead of 40.
d)	When business is brisk, Stop-n-Go deposits cash in the bank several times during the day. The manager at one store wants to reduce the time employees spend delivering cash to the bank, so he starts a new policy. Cash will build up over weekends and the total will be deposited on Monday.
e)	There are no perpetual inventory records; hence, the storeroom clerks do not keep records of goods received or issued. To compensate for the lack of perpetual records, a physical inventory count is taken monthly by the storeroom clerks, who are well supervised. Appropriate procedures are followed in making the inventory count.