Share
Explore BrainMass

Analyzing internal control weaknesses

P5-6A Cedar Grove Middle School wants to raise money for a new sound system for its auditorium.

The primary fund-raising event is a dance at which the famous disc jockey Obnoxious
Al will play classic and not-so-classic dance tunes. Roger DeMaster, the music and theater
instructor, has been given the responsibility for coordinating the fund-raising efforts. This is
Roger's first experience with fund-raising. He decides to put the eighth-grade choir in charge
of the event; he will be a relatively passive observer.

Roger had 500 unnumbered tickets printed for the dance. He left the tickets in a box on
his desk and told the choir students to take as many tickets as they thought they could sell for
$5 each. In order to ensure that no extra tickets would be floating around, he told them to dispose of any unsold tickets. When the students received payment for the tickets, they were to bring the cash back to Roger, and he would put it in a locked box in his desk drawer.
Some of the students were responsible for decorating the gymnasium for the dance. Roger
gave each of them a key to the money box and told them that if they took money out to purchase materials, they should put a note in the box saying how much they took and what it was used for. After 2 weeks the money box appeared to be getting full, so Roger asked Steve Stevens to count the money, prepare a deposit slip, and deposit the money in a bank account Roger had opened.

The day of the dance, Roger wrote a check from the account to pay the DJ. Obnoxious
Al, however, said that he accepted only cash and did not give receipts. So Roger took $200 out of the cash box and gave it to Al. At the dance Roger had Sara Billings working at the entrance to the gymnasium, collecting tickets from students and selling tickets to those who had not prepurchased them. Roger estimated that 400 students attended the dance.
The following day Roger closed out the bank account, which had $250 in it, and gave that
amount plus the $180 in the cash box to Principal Skinner. Principal Skinner seemed surprised
that, after generating roughly $2,000 in sales, the dance netted only $430 in cash. Roger did not know how to respond.

Instructions
Identify as many internal control weaknesses as you can in this scenario, and suggest how each could be addressed.

Attachments

Solution Preview

Internal control weaknesses

1. Roger had 500 unnumbered tickets printed for the dance.
2. He left the tickets in a box on his desk and told the choir students to take as many tickets as they thought they could sell for $5 each.
3. In order to ensure that no extra tickets would be floating around, he told them to dispose of any unsold tickets.
4. Roger gave the students, who were responsible for decorating the gymnasium for the dance, a key to the money box and told them that if they took money out to purchase
materials, they should put a note in the ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 300 words of text.

$2.19