Match each of the following transactions with the applicable internal control principle that is being violated listed.

Question

A. Establish responsibility
B. Maintain adequate records
C. Insure assets and bond employees
D. Separate recordkeeping from custody of assets
E. Divide responsibility for related transactions
F. Apply technological controls
G. Perform regular and independent reviews

_____ 1. Cashiers have access to the cash register recorded tape or file.
_____ 2. A company uses a voucher system, but the cash disbursement clerk pays directly from invoices received.
_____ 3. Only sales clerks use the cash registered, but they all share the same cash drawer.
_____ 4. The bookkeeper prepares and signs checks and completes the bank reconciliation.
_____ 5. A restaurant allows servers to keep cash collected in their aprons and ring in all sales at the end of the night.
_____ 6. A company fails to hire a CPA to perform an annual audit.
_____ 7. A company does not bond its key cash-handling employees.
_____ 8. A company has a single department that handles purchasing, receiving, and inventory management.
_____ 9. A large company has no internal auditor on staff.
_____ 10. A company manager keeps pre-signed checks in his desk drawer for employees to hand write when the accountant is out of the office.

Answer 1

1. D. Separate recordkeeping from custody of assets
2. B. Maintain adequate records
3. E. Divide responsibility for related transactions
4. D. Separate recordkeeping from custody of assets
5. F. Apply technological controls
6. G. Perform regular and independent reviews
7. C. Insure assets and bond employees
8. E. Divide responsibility for related transactions
9. G. Perform regular and independent reviews
10. F. Apply technological controls