L7 Notes_Part_8 - and places it in a safe. Each Friday...

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Compensating controls In small organizations, limits exist on the practical ability to segregate duties. Often, one person does all the cash functions: makes deposits, write checks, reconciles accounts, etc. Examples of compensating controls are: Reports from sources external to the function Review by external staff Duties assumed by other staff during vacations Review by supervisor staff
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Segregation of Duties: ARCO P50. The Art Appreciation Society operates a museum for the benefit and enjoyment of the community. When the museum is open to the public, two clerks who are positioned at the entrance collect a $5.00 admission fee from each nonmember patron. Members of the Art Appreciation Society are permitted to enter free of charge upon presentation of their membership cards. At the end of each day, one of the clerks delivers the proceeds to the treasurer. The treasurer counts the cash in the presence of the clerk
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Unformatted text preview: and places it in a safe. Each Friday afternoon the treasurer and one of the clerks deliver all cash held in the safe to the bank, and receive an authenticated deposit slip that provides the basis for the weekly entry in the accounting records. The Art Appreciation Society board of directors has identified a need to improve its internal controls over cash admission fees. The board has determined that the cost of installing turnstiles, salebooths, or otherwise altering the physical layout of the museum will greatly exceed any benefits. However, the board has agreed that the sale of admission tickets must be an integral part of its improvement efforts. Smith has been asked by the board of directors of the Art Appreciation Society to review the internal control over cash admission fees and provide suggestions for improvements....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L7 Notes_Part_8 - and places it in a safe. Each Friday...

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