Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 7 - Fraud, Internal Control, and Cash - Exercises: E7-3

Answer

(1) The experienced cashiers may also be tempted to fraud, when they get an opportunity or financial pressure. (2) In case three cashiers share a single cash drawer, it will give an opportunity to cashier to be dishonest. (3) There is a total violation of internal control – Physical controls. (4) At the end of the total receipt counted by the cashier, and reconciling to cash register is a violation of Internal control system - segregation of duties. (5) The company accountant makes the bank deposits and then records the day's receipt, should be as per the internal control system. The accountant should get the day's deposits from respective executives and deposit them in the banks.

Work Step by Step

(1) Therefore it always better to take precaution and get necessary bond for them. (2) Therefore it is necessary that every cashier should have his separate cash drawer, and handover the total cash as per the sales sheet. (3) Further, the collections of the first half of the day should be collected and deposited before the end of the day, as per the timing of Bank / Branch. (4) There should be another individual, who should check all the receipts of the cashier, and reconcile with cash register total and physical cash handed over. (5) Based on the statement of collections received, these collections should be recorded in account books.
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