Wilma Flint has just commenced work as the new accountant at a women’s designer clothing business. The CEO of the business, Betty Stone is concerned that there is a lack of internal controls in relation to the management of cash at her stores. She asks Wilma to undertake a review of the cash handling procedures. During her review Wilma notices that all sales transactions are rung up on a cash register and all customers are given a receipt for payment. At the end of each day the store manager counts the proceeds from the day’s sales and places the cash in the bottom draw of her desk which is left unlocked overnight. The next day the store manager prepares a bank deposit slip for the previous day’s sales and goes to the bank to deposit the money. Wilma also notices that when a delivery of new clothes is received the sales staff pay for the purchase by taking money straight from the cash register. The cash is given to the delivery driver who does not provide a receipt of the payment.

Required:

Identify three internal control principles that are lacking over the management of cash in the business. Provide evidence from the question to support your decision and detail a suggestion that would improve the internal control principles you have identified.

Answer rating: 100% (QA)

Following statements reveal the three internal control principles that are lacking over the manageme... View the full answer