28) In the following situation, which internal control procedure needs strengthening?
At Hofstra Services, the operations accountant is responsible for safeguarding and maintaining the pipe inventory and also to record inventory transactions into the journal. A separate accounting clerk keeps records of the cash receipts and payments. The treasurer signs checks and approves contracts.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
29) In the following situation, which internal control procedure needs strengthening?
At Hofstra Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes the purchase order back to the accountant for processing.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
30) In the following situation, which internal control procedure needs strengthening?
Hofstra Services hired a new accountant to be responsible for the petty cash fund and the cash receipts. The newly hired employee has an accounting degree and a criminal record.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
31) In the following situation, which internal control procedure needs strengthening?
Hofstra Services hired a new accounting manager. He signed a contract for a new accounting information system, but his position did not specify whether he was authorized to do so or not.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
Learning Objective 7-4
1) If a system of internal controls is properly designed and structured, it cannot be overcome or broken into.
2) If a system of internal controls is too strict or complex, it may harm efficiency, and not be cost-effective.
3) When designing a system of internal control, every procedure should be implemented strictly and properly, regardless of the cost.
4) A strong computer firewall is an essential element of good internal controls for e-commerce.
5) A security guard at a WalMart costs about $28,000 a year. On average, each guard prevents about $50,000 of theft. Which of the following internal control concepts does this illustrate?
A) Proper authorization
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Cost/benefit relationship
6) Which of the following is NOT a problem that must be addressed in the internal controls for e-commerce?
A) Trojans
B) Stolen credit card numbers
C) Phishing expeditions
D) Separation of duties