173k views
2 votes
The owner of Zeke's Landscaping Designs just hired an office manager to handle all the office functions for him. Among other responsibilities, the office manager will handle key accounting functions such as processing customer payments, writing cheques to employees to pay the payroll, handle daily bank deposits at the bank, pay suppliers, and reconcile the company bank account bank reconciliations. What internal cash control practice is being overlooked by the owner?

a) Separation of duties
b) Physical control
c) Cash budgeting
d) Electronic funds transfer

User Dpington
by
7.7k points

1 Answer

3 votes

Final answer:

The overlooked internal cash control practice at Zeke's Landscaping Designs is the separation of duties. A single manager handling all key financial transactions increases the risk of errors and fraud.

Step-by-step explanation:

The internal cash control practice being overlooked by the owner of Zeke's Landscaping Designs is a) Separation of duties. Separation of duties is a key internal control measure that involves dividing financial responsibilities among multiple individuals to prevent fraud and errors. In this case, the office manager handles key accounting functions such as processing customer payments, writing cheques, handling bank deposits, and paying suppliers. However, the owner should assign different individuals to perform these tasks to create a checks and balances system.

The internal cash control practice being overlooked by the owner of Zeke's Landscaping Designs when the office manager is tasked with handling all the office functions, including key accounting functions, is separation of duties. This fundamental principle of internal control aims to reduce the risk of errors and fraud by ensuring that no single individual has control over all aspects of a financial transaction.

By entrusting the office manager with processing customer payments, handling payroll, making bank deposits, paying suppliers, and reconciling the company's bank account, the owner is potentially exposing the business to embezzlement or mismanagement of funds.

User Morty Choi
by
7.2k points