Question

Analyze the following case: list two control strengths and two control deficiencies; for each control strength, describe how the problem (risk) is avoided (mitigated) by the control; for each control deficiency, describe how might the company improve its controls.

Hot Ice Company is a 10-store chain in Texas that sells freezers and accessories. Each store has a full-time, salaried manager and an assistant manager. The sales personnel are paid an hourly wage and a commission based on sales volume.

The company uses electronic cash registers to record each transaction. The salesperson enters his or her employee number at the beginning of his/her shift. For each sale, the salesperson rings up the order by scanning the item’s bar code, which then displays the item’s description, unit price, and quantity (each item must be scanned). The cash register automatically assigns a consecutive number to each transaction. The cash register prints a sales receipt that shows the total, any discounts, the sales tax, and the grand total.  

The salesperson collects payment from the customer, gives the receipt to the customer, and either directs the customer to the warehouse to obtain the items purchased or makes arrangements with the shipping department for delivery. The salesperson is responsible for using the system to determine whether credit card sales are approved and for approving both credit sales and sales paid by check. Sales returns are handled in exactly the reverse manner, with the salesperson issuing a return slip when necessary.  

At the end of each day, the cash registers print a sequentially ordered list of sales receipts and provide totals for cash, credit card, and check sales, as well as cash and credit card returns. The assistant manager reconciles these totals to the cash register tapes, cash in the cash register, the total of the consecutively numbered sales invoices, and the return slips. The assistant manager prepares a daily reconciled report for the store manager’s review.  

Cash sales, check sales, and credit card sales are reviewed by the manager, who prepares the daily bank deposit. The manager physically makes the deposit at the bank and files the validated deposit slip. At the end of the month, the manager performs the bank reconciliation. The cash register tapes, sales invoices, return slips, and reconciled report are mailed daily to corporate headquarters to be processed with files from all the other stores. Corporate headquarters returns a weekly Sales and Commission Activity Report to each store manager for review.

Answer 1

ANSWER :

CONTROL STRENGTH :

* Sales rep enters their delegate number at beginning of their day of work so that if any misunderstanding happens competent individual can be perceived

* Rings up the solicitation by sifting scanner tag of things are must to create a consecutive number to each trade by electronic cash register. Thusly no things can be sold without segment

CONTROL DEFICIENCIES :

* Sales rep enters laborer number without any other person .if a salesperson enters wrong delegate name there no check point open

* Sales rep handles cash, charge card bargains support &sales on checks all . it's definitely not a fair practice charge card arrangements and check bargains should by managed by others

describing the problem avoided by the control :

Issues can be declined using segment of sales rep of agent's number by associate chief

Arrangements on charge card support and arrangements on checks should be managed by right hand boss as he is continuously competent being pay rates

A much required control is bargain corporate head quarters reestablishes seven days after week arrangements and commission development report to every senior director for review anyway assuagement is done on month to month premise , it should be done step by step as well