Question

Recall the components of internal control. identify the internal control weakness in this​ situation, and propose a way to correct it. the internal control weakness is that the ▼ controller compares the deposit slip to the amount posted. credit department receives incoming cash from the customers. credit department runs a credit check on all customers. credit department transfers cash to the treasurer for deposit. with access to​ cash, a ▼ credit department employee can pocket credit department employee can deposit all mail room employee can pocket cash received from a customer and ▼ copies all remittance slips for the controller. destroy the remittance slip. then balances the deposit. journalizes the remittance slips in one entry. the credit department can then​ write-off the​ customer's account as​ uncollectible, and the company will stop pursuing collection from the customer.

Answer 1

Answer:

The internal control weakness includes:

1. The credit department receives incoming cash from the customers.

2. A credit department can pocket cash received from a customer and copies all remittance slips for the controller, then destroy the remittance slip.

3. The credit department can then write off customer's account as uncollectible, and the company will stop pursuing collection from the customers

Explanation:

To begin, it is important to understand the concept of Internal Control. Internal control can be generally understood as the procedures determined to ensure organization's objectives in efficiency and effectiveness, reliable financial reporting and compliance with existing organization's rules and regulations.

Hence, internal control is meant to strengthen the achievement of an organization's objectives. Thus, we have seen a number of weaknesses from the scenarios painted above. It must be stated that the weaknesses stem from the fact that the company receives incoming cash receipt from customers.

To avoid and prevent this, a company should have a cash go to a clocked box at the bank. With this, the weaknesses emanating from physical cash handling by the credit department will be eliminated.

Taking a critical look at the internal control procedures, it'll be observed that the policies adopted on cash receipt is one not generally in tune with best practices. Hence, to strengthen the control, a cash go to a clock box at the bank should be created to facilitate and encourage customers' deposits in the banks. Doing this will ensure the department rids of weaknesses emanating from this cash treatment, and point number 2 and 3 as stated above can be easily resolved.