The following control procedures are used in Kelton Company for over-the-counter cash receipts

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The following control procedures are used in Kelton Company for over-the-counter cash receipts.

(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated.

Procedure Weakness Principle Violated1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy.  Inability to establish responsibility for cash on a specific clerkThe accountant should not handle cashCash is not independently countedCashiers are not bonded and background checks are not conductedCash is not adequately protected from theft  Physical controlsEstablishment of responsibilitySegregation of dutiesDocumentation proceduresHuman resource controlsIndependent internal verification       2. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.  The accountant should not handle cashCash is not adequately protected from theftCashiers are not bonded and background checks are not conductedInability to establish responsibility for cash on a specific clerkCash is not independently counted  Establishment of responsibilityPhysical controlsIndependent internal verificationSegregation of dutiesHuman resource controlsDocumentation procedures       3. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.  Cashiers are not bonded and background checks are not conductedThe accountant should not handle cashInability to establish responsibility for cash on a specific clerkCash is not adequately protected from theftCash is not independently counted  Establishment of responsibilityHuman resource controlsDocumentation proceduresPhysical controlsIndependent internal verificationSegregation of duties       4. At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.  Cash is not adequately protected from theftCash is not independently countedInability to establish responsibility for cash on a specific clerkThe accountant should not handle cashCashiers are not bonded and background checks are not conducted  Independent internal verificationPhysical controlsHuman resource controlsDocumentation proceduresSegregation of dutiesEstablishment of responsibility       5. The company accountant makes the bank deposit and then records the day’s receipts.  Cash is not adequately protected from theftThe accountant should not handle cashCashiers are not bonded and background checks are not conductedInability to establish responsibility for cash on a specific clerkCash is not independently counted  Human resource controlsIndependent internal verificationSegregation of dutiesDocumentation proceduresEstablishment of responsibilityPhysical controls