Question

At most movie theaters, one employee sells tickets and another employee collects them. One night, when you’re at the movies, your friend comments that this is a waste of the theater’s money.1. Identify the name of the control principle to which this situation relates.2. Explain to your friend what could happen if the same person did both jobs.

Answer 1

Answer: Segregation of duties Principle

Explanation:

Internal control are procedures and processes that ensures effectiveness and efficiency in the company's operation and safeguard company assets. Internal Control also ensures that company Laws, Policies and regulations are adhered to, in other words Internal Control ensures Compliance. Company's adopts Internal Control in order to try and protect their Assets against fraud, theft ,inappropriate use, of company asset etc.

This Control Principle used by the movie theatres is known as the Segregation of Duties Principle. Segregation simply means key duties must not be performed by one person. Reasoning behind this Principle is an employee's normal duties should not present him or her with an opportunity to commit fraud and also be in a position to manipulate records. Example If an employee who orders and receives stock is the same employee who performs stock taking and prepares inventory records, that would give him or her a  window of opportunity to steal company inventory and manipulate inventory records.

Segregation of duties Principle thus stipulates that duties must be segregated (Divided Tasks or duties among employees). Segregation of duties is a very important principle because it reduces the risk of fraud and safe guards the assets of the company from being used in appropriately. Minimal Fraud risk and safe guarding of company assets are some of the objectives of Internal Control. The employee who sells tickets should not be the same employee who collects them.

When both of these key jobs are performed by the same person, This presents an opportunity for the employee steal tickets and sell them for him or her self or an employee , employee may  sell tickets and keep the money for him or her self. The bottom line of this principle is that key duties should be shared among employees

Answer 2

Answer: Division of Labour

Explanation: This is the division of a task or job role into smaller parts between two or more people.

Division of Labour helps to achieve a higher rate of productivity and efficiency.

By having the same person doing both jobs productivity and efficiency is low, because the workload increase on that individual which directly affects his performance on the job.