Question

instructions: for each of the following independent scenarios, identify the internal control principle that best describes it.
internal control principles
establishment of responsibility
segregation of duties
documentation procedures
physical controls
independent internal verification
human resource controls
1 after payment, an invoice is stamped \paid.\
2 cashier department supervisors make daily cash counts.
3 only designated personnel are authorized to handle and have access to cash receipts.
4 the employee who approves an item for payment is different from the employee who pays the item.
5 cash register tapes are used for all over - the - counter receipts.
6 checks are compared with approved invoices before being issued.
7 small bills and coins on hand to resupply cash registers are kept in a safe.
8 the company bonds all employees who handle cash.
9 the treasurer is the only employee authorized to sign checks.
10 each month, an internal auditor compares the assets on hand are to the accounting records.

Explanation:

1. Documentation procedures: Stamping "PAID" on an invoice after payment is a documentation step to prevent duplicate payments.
2. Independent internal verification: Cashier department supervisors making daily cash counts is an independent check on cash handling.
3. Establishment of responsibility: Only designated personnel handling cash receipts defines responsibility.
4. Segregation of duties: Different employees for approval and payment segregate duties.
5. Documentation procedures: Using cash register tapes for receipts is a documentation method.
6. Independent internal verification: Comparing checks with approved invoices is a verification step.
7. Physical controls: Keeping small bills and coins in a safe is a physical safeguard.
8. Human resource controls: Bonding employees who handle cash is a human - resource related control.
9. Establishment of responsibility: Only the treasurer signing checks defines responsibility.
10. Independent internal verification: Internal auditor comparing assets and records is an independent check.

Answer:

1. Documentation procedures
2. Independent internal verification
3. Establishment of responsibility
4. Segregation of duties
5. Documentation procedures
6. Independent internal verification
7. Physical controls
8. Human resource controls
9. Establishment of responsibility
10. Independent internal verification