Question

​gary's great cars purchases​ high-performance auto parts from a nebraska vendor. dave​ simon, the accountant for​ gary's, verifies receipt of merchandise and​ then, prepares,​ signs, and mails the check to the vendor. requirements 1. identify the internal control weakness over cash payments. 2. what could the business do to correct the​ weakness?

Answer 1

For number 1:

There is only one person that is responsible for verifying receipt of merchandise, authorizing payment, and preparing the payment.

For number 2:

In order to correct the weakness stated in the number 1, here is what the business should do:

Purchase orders and utilizing author from operations should be used to authorize inventory purchases.

The accountant should be the one to receive the receipt of goods and purchase orders forms from the other departments before issuing payment.

The receipt of goods and placing the purchase order should be checked by someone other than the account. Since that is not the work of an accountant and is not found in the job description of the accountant.