For each procedure, explain the weakness in internal control and identify the internal control principle that is violated.
Procedure
Weakness'
Each week, company checks are left in an
unmarked envelope on a shelf behind the cash
register.
The store manager personally approves all payments
before she signs and issues checks.
The store purchases used goods for resale from
people who bring items to the store. Since that can
occur anytime that the store is open, all employees
are authorized to purchase goods for resale by
disbursing cash from the register. The purchase is
documented by having the store employee write on a
piece of paper a description of the item that was
purchased and the amount that was paid. The
employee then signs the paper and puts it in the
register.
After payment, bills are "filed" in a paid invoice folder.
The company accountant prepares the bank
reconciliation and reports any discrepancies to the
owner.
