he procedures used for over-the-counter receipts are as follows. At the close of each day's business, the sales clerks count the cash in their respective cash drawers, after which they determine the amount recorded by the cash register and prepare the memo cash form, noting any discrepancies. An employee from the cashier's office counts the cash, compares the total with the memo, and takes the cash to the cashier's office.

Question

a. Identify the weak link in internal control.

b. Who should remove the cash register tapes from the register?

Answer 1

a. The weak link in internal control in this procedure lies in the fact that the same employee who handles the cash (the sales clerks) also prepares the memo cash form, which records discrepancies. This creates a potential conflict of interest, as the clerks could manipulate the records to cover up discrepancies or steal cash without being easily detected. A better internal control system would involve a separation of duties, where one employee counts the cash and prepares any necessary documentation, while another employee independently verifies the cash amount and handles any discrepancies.

b. The cash register tapes should ideally be removed from the register by a designated employee who is independent from the sales clerks and cash handling process, such as a supervisor or an employee from the cashier's office. This separation of responsibilities helps to ensure that the cash register tapes are handled in a controlled manner, reducing the risk of manipulation or fraud.