The internal control procedures in Philips Company make the following provisions. Identify the principles of internal control that are being followed in each case.Employees who have physical custody of assets do not have access to the accounting records.Each month the assets on hand are compared to the accounting records by an internal auditor.A prenumbered shipping document is prepared for each shipment of goods to customers.All over-the-counter receipts are registered on cash registers.All cashier are bonded.Daily cash counts are made by Cashier department supervisors.The Duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.Only Cashier may operate cash registers.Company checks are prenumbered.The bank statement is reconciled monthly by an internal auditor.Blank checks are stored in a safe in the treasurer’s office.Only the treasurer or assistant treasurer may sign checks.Checks signers are not allowed to record cash disbursment transactions.Cashiers are bonded.General Ledgers are reconciled against it Subsidiary Ledgers on a monthly basis. Identify which control activity is violated in each of the following situations and explain how the situation creates an oppurtunity for fraud or inappropriate accounting practices.

Employees have physical custody of assets but do not have access to accounting records –…

Answered: Identify which control activity is…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter7A: Internal Controls

Section: Chapter Questions

Problem 2SEB

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The internal control procedures in Philips Company make the following provisions. Identify the principles of internal control that are being followed in each case.

Employees who have physical custody of assets do not have access to the accounting records.
Each month the assets on hand are compared to the accounting records by an internal auditor.
A prenumbered shipping document is prepared for each shipment of goods to customers.
All over-the-counter receipts are registered on cash registers.
All cashier are bonded.
Daily cash counts are made by Cashier department supervisors.
The Duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.
Only Cashier may operate cash registers.
Company checks are prenumbered.
The bank statement is reconciled monthly by an internal auditor.
Blank checks are stored in a safe in the treasurer’s office.
Only the treasurer or assistant treasurer may sign checks.
Checks signers are not allowed to record cash disbursment transactions.
Cashiers are bonded.
General Ledgers are reconciled against it Subsidiary Ledgers on a monthly basis.

Identify which control activity is violated in each of the following situations and explain how the situation creates an oppurtunity for fraud or inappropriate accounting practices.

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