Question Details

CHAPTER 8 FRAUD, INTERNAL CONTROL, AND CASH

COMPUTER S 230 CHAPTER 8 PART 14

SHORT-ANSWER ESSAY QUESTIONS
S-A E  224
Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the three factors and explain what is meant by each.


S-A E  225
Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability of the accounting records. Briefly discuss how (1) cost-benefit considerations, (2) the human element, and (3) the size of the business, affect the implementation of a system of internal controls.


S-A E 226
Your friend, Dean, has opened a movie theater. Dean states that he does not have time to develop and implement a system of internal controls.
a.	Provide Dean with the objectives of a system of internal controls.
b.	Explain to Dean why he should develop a system of internal controls.


S-A E  227
(a)	Identify the three activities that pertain to a petty cash fund, and indicate an internal control principle that is applicable to each activity. (b) When are journal entries required in the operation of a petty cash fund?

S-A E  228
The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and makes all cash disbursements by check, explain why the cash balance per books might not agree with the cash balance shown on the bank statement. Identify specific examples that may cause differences between the cash balance per books and the cash balance per bank.


S-A E 229	(Ethics)
Moyer Instruments is a rapidly growing manufacturer of medical devices. As a result of its growth, the company's management recently modified several of its procedures and practices to improve internal control. Some employees are upset with the changes. They have complained that all these changes just show that the company no longer trusts them.

Required:
"Internal controls exist because most people can't be trusted."  Is this true?  Explain.


S-A E 230	(Communication)
Medaid is a medical office management franchise. There are currently twenty-five medical offices managed by a Medaid franchisee. One of the services provided to franchisees is assistance in training various staff members.

Medaid is preparing a manual for the front office staff to use as a reference guide. It will be used in training new employees as well. One of the reasons the manual is being prepared is to stress the importance of strong internal controls.

Required:
Prepare a short paragraph, to be included in the training materials, describing the benefits of sound internal control, from the viewpoint of the employee.