Question

Determine whether each procedure described below is an internal control strength or weakness, then identify the internal control violated or followed for each procedure.

1. The company does not use electronic time clocks because it fears it will hurt employee morale
2. An employee cannot approve their own request for purchases of inventory
3. Several salesclerks share the same cash drawer
4. Employees that handle easily transferable assets such as cash are bonded
5. The company does not allow employees with access to cash to modify accounting records

Weakness or Strength Internal Control Principle
__________________ ___________________

Answer 1

The procedures mentioned in the question are analyzed and classified as internal control strengths or weaknesses, with the corresponding internal control principles violated or followed.

Step-by-step explanation:

1. The procedure of not using electronic time clocks because it may hurt employee morale is a weakness in internal control. The internal control principle violated here is the principle of segregation of duties. By not using electronic time clocks, there is a lack of proper tracking and verification of employee attendance, which can lead to potential fraud or inaccuracies in payroll.

2. The procedure of not allowing an employee to approve their own request for purchases of inventory is a strength in internal control. This follows the internal control principle of segregation of duties. By requiring a separate employee to approve purchase requests, there is a system of checks and balances to prevent potential fraud or unauthorized purchases.

3. The procedure of several salesclerks sharing the same cash drawer is a weakness in internal control. The internal control principle violated here is the principle of segregation of duties. Sharing the same cash drawer increases the risk of theft or errors, as it becomes difficult to trace individual accountability.

4. The procedure of requiring employees who handle easily transferable assets such as cash to be bonded is a strength in internal control. This follows the internal control principle of establishing responsibility. Bonding ensures that employees handling cash are financially insured against any potential losses or theft, increasing accountability and reducing the risk of financial loss.

5. The procedure of not allowing employees with access to cash to modify accounting records is a strength in internal control. This follows the internal control principle of maintaining control procedures. By restricting the ability to modify accounting records, there is a reduced risk of unauthorized or fraudulent manipulation of financial data.