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70-358+Chapter+6+Questions[1] - 70-358 Discussion Questions...

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70-358 Discussion Questions: 6.2 Small companies can do the following things to compensate for their inability to implement an adequate segregation of duties: Effective supervision may be the most important element of control in situations where separation of functions cannot be fully achieved. In very small businesses, the owner-manager may find it necessary to supervise quite extensively . For example, the manager could reconcile the bank account, examine invoices, etc. Fidelity bonding is a second form of internal control which is critical for persons holding positions of trust which are not entirely controlled by separation of functions. Document design and related procedures are also important to internal control in this situation. Documents should be required with customer returns to encourage customer audit. Document design should include sequential prenumbering to facilitate subsequent review. Where appropriate, employees should be required to sign documents to acknowledge responsibility for transactions or inventories. In small organizations management can use computers to perform some of the control functions that humans perform in manual systems. For example, the computer can: - Check all customer numbers to make sure they are valid - Automatically generate purchase orders and a member of management or a designated buyer could authorize them. 5. There are two reasons for using tickets. 1. The theater is trying to prevent cashiers from stealing cash. You cannot get into the theater without a ticket so you never give cash to a cashier without insisting on a ticket. That makes it much harder for a cashier to pocket cash. 2. Prenumbered tickets are also used so cashiers cannot give tickets to their friends. The number of tickets sold at the cashier counter can be reconciled with the number of tickets taken by the usher letting patrons into the theater. Reconciling the cash in the register to the tickets sold and then reconciling the number of tickets sold to the number collected by the usher helps prevent the theft of cash and giving tickets away to friends.
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