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Exercise 8-3 Internal control strengths and weaknesses LO Cl Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control violated or followed for each procedure
Exercise 8-3 Internal control strengths and weaknesses LO Cl
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 owner does not use ID scanners to limit access to expensive merchandise. Instead, the owner argues they hire honest employees. 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 devotes resources towards keeping accurate accounting records for machinery.
Expert Solution
| Weakness or strength | Internal control principle | |
| 1 | Weakness | does not use ID scanners (surely they must hire honest employees and also use appropriate tools) |
| 2 | Strength | Higher one should approve. Can't approve their own request. |
| 3 | Weakness | Establish responsibilities |
| 4 | Strength | Insure assets and bond key employees |
| 5 | Strength | Keeping accurate records for machinery |
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