Question

Accounting: explain the weakness in internal control and identify the internal control principle that violated?1. Each week, Katja leaves 100 company checks in an unmarked envelope on a shelf behind the cash register.2. The store manager personally approves all payments before signing and issuing checks.3. The company checks are unnumbered.4. After payment, bills are "filed" in a paid invoice folder.5. The company accountant prepares the bank reconciliation and reports any discrepancies to the owner.

Answer 1

1.Each week, Katja leaves 100 company checks in an unmarked envelope on a shelf behind the cash register.

physical controls

2.The store manager personally approves all payments before signing and issuing checks.

segregation of duties

3.The company checks are unnumbered.

documentation procedures

4.After payment, bills are “filed” in a paid invoice folder.

documentation procedures

5.The company accountant prepares the bank reconciliation and reports any discrepancies to the owner.

independent internal verification

Step-by-step explanation:

1.Each week, Katja leaves 100 company checks in an unmarked envelope on a shelf behind the cash register.

physical controls

2.The store manager personally approves all payments before signing and issuing checks.

segregation of duties

3.The company checks are unnumbered.

documentation procedures

4.After payment, bills are “filed” in a paid invoice folder.

documentation procedures

5.The company accountant prepares the bank reconciliation and reports any discrepancies to the owner.

independent internal verification