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CC8 COOKIE CREATIONS
Part 1
The weaknesses in internal accounting controls in the system recommended
by John are:
(1) The cash could be stolen from John’s vehicle before it is deposited in the
bank.
(2) John could potentially steal from the company and then cover the theft
because of a lack of segregation of duties between the handling of cash,
Improvements should include the following:
(1) Cash should be deposited in the bank daily. At a minimum cash should be
locked in a safe until it can be deposited.
(2) John should be responsible for the accounting function only. Natalie (or
some other independent person) should sign all checks and make all
deposits. Checks should be signed only when there is documentation
CC8 (Continued)
Part 1 (Continued)
(4) The accounting records should be maintained on site and regular back-
ups should be prepared. It would be best if John used a computer at
Cookie Creations to prepare the accounting information; however, if he is
going to use his laptop, Natalie should ensure that she is provided with a
regular back-up of all the accounting records. This ensures that if John
Part 2
(a) COOKIE CREATIONS
Bank Reconciliation
June 30, 2017
Cash balance per bank statement .............................. $3,359
Add: Deposit in transit .............................................. $110
Bank error Check No. 603 ($452 – $425) ......... 27 137
3,496
Less: Outstanding checks ($238 + $297) .................. 535
CC8 (Continued)
Part 2 (Continued)
(b) June 30 Miscellaneous Expense ......................... 13
Cash ................................................... 13
30 Service Revenue .................................... 30
Cash ................................................... 30
