Which of the following situations is an example of adequate internal controls? A. HiTimes Motorcycles is...

Which of the following situations is an example of adequate internal controls?

	A.	HiTimes Motorcycles is a small cycle shop in Destin Florida. Eddie Cruzin, the company accountant, prepares a full bank reconciliation following receipt of the monthly bank statements, that he receives online and confirms all differences between the company's cash account and the bank account within one business day. Additionally Javier, the business owner, signs off on the bank reconciliation immediately following his review of it's preparation.
	B.	Ted opens the mail and receives the check payments from clients, and counts the cash received through the mail unsupervised, before preparing the deposit slip and taking it to the bank the following date.
	C.	Fresh Florist's accountant was Mary Smith. After fifteen years of work, Mary was found to have been depositing small cash payments from clients into her own personal account when taking the daily bank deposit for the company. It's estimated that Mary had stolen up to $63,000 over the last two years alone. Mary's position was not insured against theft or loss by Fresh Florist.
	D.	The warehouse employees of Barnyard, Industries are to provide shipping documents and inventory confirmations to the purchasing department/accounting department in a timely manner for reconciling of sales orders. Currently the warehouse is submitting only about 88% of all shipping documents which are being received 35-40 days following shipment by the purchasing/accounting department.

Expert Solution

correct option is "A" -

There is an adequate control over the reconcilation process.The accountant receives the bank statement online and then complete the reconcilation process within the day(frequently) .The work of accountant is then controlled or reviwed by owner .(check over accountant work by appropriate authority)

Reason for other options (incorrect)

B)There is no proper allocation of dutires and responsibilities .A single person is carrying on all activities

C)There is a lack of proper control over petty cash because of which mary smith has committed fraud of $ 63000 .

D)The department is providing only 88% of shipping documents even after taking longer period of time which shows the department is working inefficiently .There's a required a proper control to look after whether the department is providing documents in a timely manner to other relevant deparment which is missing in this case.

ekkarill92 answered 2 years ago

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