The following control procedures are used in Kelton Company for
over-the-counter cash receipts.

(a) For each procedure, explain the weakness in
internal control and identify the control principle that is
violated.

Procedure				Weakness		Principle Violated
1.		Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy.		Cash is not adequately protected from theft Cash is not independently counted The accountant should not handle cash Cashiers are not bonded and background checks are not conducted Inability to establish responsibility for cash on a specific clerk		Independent internal verification Establishment of responsibility Physical controls Human resource controls Documentation procedures Segregation of duties
2.		All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.		Cash is not adequately protected from theft Inability to establish responsibility for cash on a specific clerk Cash is not independently counted Cashiers are not bonded and background checks are not conducted The accountant should not handle cash		Documentation procedures Human resource controls Establishment of responsibility Physical controls Independent internal verification Segregation of duties
3.		To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.		Cash is not adequately protected from theft Cashiers are not bonded and background checks are not conducted Inability to establish responsibility for cash on a specific clerk Cash is not independently counted The accountant should not handle cash		Human resource controls Independent internal verification Establishment of responsibility Physical controls Segregation of duties Documentation procedures
4.		At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.		Cashiers are not bonded and background checks are not conducted Inability to establish responsibility for cash on a specific clerk Cash is not adequately protected from theft The accountant should not handle cash Cash is not independently counted		Documentation procedures Independent internal verification Segregation of duties Physical controls Human resource controls Establishment of responsibility
5.		The company accountant makes the bank deposit and then records the day’s receipts.		Cashiers are not bonded and background checks are not conducted Cash is not adequately protected from theft Cash is not independently countedInability to establish responsibility for cash on a specific clerk The accountant should not handle cash		Documentation procedures Physical controls Human resource controls Segregation of duties Establishment of responsibility Independent internal verification