Reference no: EM131787398

The Art Appreciation Society operates a museum for the benefit of the community. During hours when the museum is open to the public, two clerks are positioned at the entrance and collect a $5 admission fee from each nonmember patron. Members of the Society are permitted to enter free upon presentation of their membership cards.

At the end of each day, one of the clerks delivers the proceeds to the treasurer. The treasurer counts the cash in the presence of the clerk and places the cash in a safe. Each Friday afternoon the treasurer and one of the clerks deliver all of the cash in the safe to the bank and receive a deposit slip that drives a weekly entry in the cash receipts records.

The Treasurer enters the cash receipts in the cash journal and reconciles the bank statement at the end of the month.

The Society has an administrative assistant who writes the checks for cash disbursements. She creates a voucher package which includes the purchase requisition, purchase order and invoice. However the treasurer signs the checks. The Treasurer enters the checks into the cash payments journal. He then returns the voucher package back to the administrative assistant for filing.

The Board of Directors has identified a need to improve the system of internal controls over cash. The Board has determined that the cost of installing turnstiles or sales booths would greatly exceed the benefits. However the Board agrees that controls over the sale of admission tickets needs improvement.

1) The Board wants you to audit the cash account of the Society.

For each transaction -related audit objective for sales, a) list key existing controls, b) test of controls, c) deficiencies in controls, and d) test of transactions.