Identify Internal Control Principal

A. Identify internal control principles
1.The first internal control principal is an applied establishment of responsibility. Only one designated person is authorized to handle the tickets. One roll is designated per shift and the manager locks the roll in the cash register. Also designating only one person like a cashier to handle cash and different individuals should be assigned the duties of receiving cash, recording cash, and custody of cash.
2.The next principal is the segregation of duties. There are different individuals that receive cash, record cash receipts and hold the cash. The cashiers take the cash from the customers and the theatre manager records the cash and the bank holds the cash.
3.The next principal is documentation procedures. They use a locked roll of ticket slips and the other half goes into the box. The manager also sends copies of the deposit slip and initialed cash count sheets to the theater company treasurer and the company’s accounting department.
4.Pyhsical, mechanical, and electronic controls are the serially numbered tickets, rolls of tickets locked into machine by manager, the usher accounts for tickets entering the theater, the manager at the end of a shift removes the tickets and makes a cash count, the cash count is initialed by the cashier verifying they sales, the manager deposits the receipts in a bank night deposit vault, the manager sends copies of the deposit slip and the cash count sheets to the company treasurer for verification and the company’s accounting department, and last they receipts from the shifts are stored in a safe in the managers office.
5.The last internal control principal is independent internal verification like supervisors count cash receipts daily, treasurer compares total receipts to bank deposits
daily.

B. If the usher and cashier decide to collaborate to misappropriate cash, what actions might they take?

One way the usher and cashier might be able to take money is if they usher takes the ticket and doesn’t give part back to the customer entering the theatre. If a customer asked for their ticket the usher could answer that there is a new policy, the customer might not ask, or the usher could politely respond with that they must have forgot. The usher could then give the cashier the tickets he has collected from people entering the movie. The cashier will then use those tickets to give out the customers without having to ring the customer out to get a ticket. This would work only if the customers were paying cash. The cashier could kindly ask, “Would you be paying cash, check or credit” in the beginning of the transaction to know if they would be able to do the scam. The customer would think nothing of this question. The cashier would take the cash give them customer the ticket taken from a previous customer and proceed to enter the theatre.