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1: Describe fraud and its impact; identify internal controls) giriTtne internal control weakness in the following situations. State how the person can hurt the company.
a. John Munson works as a security guard at VALID parking in Denver. Munson has a master key to the cash box where customers pay for parking. Each night Munson prepares the cash report that shows (a) the number of cars that parked on the lot and (b) the day's cash receipts. Lily Cruise, the VALID treasurer, checks Munson's figures by multiplying the number of cars by the parking fee per car. Cruise then deposits the cash in the bank.
b. Eloise Fulton is the purchasing agent for Milton Sports Equipment. Fulton prepares purchase orders based on requests from division managers of the company. Fulton faxes the purchase order to suppliers who then ship the goods to Milton. Fulton receives each incoming shipment and checks it for agreement with the purchase order and the related invoice. She then routes the goods to the respective division managers and sends the receiving report and the invoice to the accounting department for payment.
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Financial Statement Analysis and Preparation
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