Reference no: EM132737925

Each of the following situations has an internal control weakness:

1. Syspro Software Associates sells accounting software. Recently, the development of a new software program stopped while the programmers redesigned Syspro Software Associates' accounting system. Syspro Software Associates' own accountants could have performed this task.
2. Judy Sloan has been your trusted employee for 30 years. She performs all cash-handling and accounting duties. She has just purchased a new Lexus and a new home in an expensive suburb. As the owner of the company, you wonder how she can afford these luxuries because you pay her $35,000 per year and she has no sources of outside income.
3. Sanchez Hardwoods Ltd., a private corporation, falsified sales and inventory figures to get a large loan. The company prepared its own financial statements. The company received the loan but later went bankrupt and couldn't repay the loan.
4. The office supply company from which The Family Shoe Store purchases sales receipts recently notified Family that the last shipped receipts were not prenumbered. Louise Bourseault, the owner of Family, replied that she never uses the receipt numbers, so the omission is not important.
5. Discount stores such as Dollar Mart make most of their sales for cash, with the remainder in debit card and credit card sales. To reduce expenses, one store manager ceases purchasing fidelity bonds on the cashiers.

Required

Problem 1: Identify the missing internal control procedure in each situation.

Problem 2: Identify the potential problem that could be caused by each control weakness.

Problem 3: Propose a solution to each internal control problem.