Understanding Sarbanes-Oxley and identifying internal control strengths and weaknessesThe following situations suggest a strength or a weakness in internal control.Top managers delegate all internal control procedures to the accounting department.Accounting department staff (or the bookkeeper) orders merchandise and approves invoices for payment.Cash received over the counter is controlled by the sales clerk, who rings up the sale and places the cash in the register. The sales clerk matches the total recorded by the register to each day’s cash sales.The employee who signs checks need not examine the payment packet because he is confident the amounts are correct.RequirementsDefine internal controlThe system of internal control must be tested by external auditors. What law or rule requires this testing?. Identify each item in the list above as either a strength or a weakness in internal control, and give your reason for each answer.

1.Internal control: Internal control is a process which ensures continuous reliability of…

Answered: Understanding Sarbanes-Oxley and…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter7A: Internal Controls

Section: Chapter Questions

Problem 4SPA

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Understanding Sarbanes-Oxley and identifying internal control strengths and weaknesses

The following situations suggest a strength or a weakness in internal control.

Top managers delegate all internal control procedures to the accounting department.
Accounting department staff (or the bookkeeper) orders merchandise and approves invoices for payment.
Cash received over the counter is controlled by the sales clerk, who rings up the sale and places the cash in the register. The sales clerk matches the total recorded by the register to each day’s cash sales.
The employee who signs checks need not examine the payment packet because he is confident the amounts are correct.

Requirements

Define internal control
The system of internal control must be tested by external auditors. What law or rule requires this testing?
. Identify each item in the list above as either a strength or a weakness in internal control, and give your reason for each answer.

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