Question

consider each situation separately. identify the missing internal control procedure from these characteristics:

• assignment of responsibilities
• separation of duties
• audits
• electronic devices
• other controls (specify)

(leave the reason for other control column blank if other controls is not selected for the internal control procedure column.)
a while reviewing the records of vanderpoole pharmacy, you find that the same employee orders merchandise and approves invoices for payment.
internal control procedure reason for other control
separation of duties
b business is slow at top of the world amusement park on tuesday, wednesday, and thursday nights. to reduce expenses, the business decides not to use a ticket - taker on those nights. the ticket seller (cashier) is told to keep the tickets as a record of the number sold.
internal control procedure reason for other control
separation of duties
c the same busiest employee has served as cashier for 12 years.
internal control procedure reason for other control

Explanation:

a. When one employee both orders merchandise and approves invoices for payment, it violates the separation - of - duties principle which aims to prevent fraud by dividing key tasks.
b. Having the ticket seller (cashier) also keep track of ticket sales without a ticket - taker creates a lack of separation of duties as the cashier has both custody of cash (from ticket sales) and record - keeping responsibilities.
c. An employee serving as a cashier for 12 years without rotation or additional controls may lead to potential fraud or errors going undetected. Rotation of duties or regular audits can be effective controls. Here, rotation of duties (a form of other controls) is lacking.

Answer:

a. Separation of duties
b. Separation of duties
c. Other controls (rotation of duties)