The following procedures were recently implemented at the Health Station, Inc For each procedure, indicate whether the internal control over cash represents (1 ) a strength or (2 ) a weakness. If it is a weakness, please explain why. (a) All mail is

Question

opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. (b) The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. (c) At the end of each day, any deposited cash receipts are placed in the bank's night depository. (d) The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.

Answer 1

a. This is a weakness. The mail clerk should prepare an initial listing of cash remittances before forwarding the cash receipts to the cashier. This establishes initial accountability for the cash receipts. The mail clerk should forward a copy of the listing of remittances to the accounts receivable clerk for recording in the accounts.

b. This is a strength.

c. This is a strength.

d. This is a weakness. The bank reconciliation should be prepared by someone not involved with the handling or recording of cash.