Internal Control Principles in Gibraltar Coffee Shop
Internal Control Principles in Action
Gibraltar Coffee Shop has implemented several internal control principles to safeguard its assets and ensure efficient operations. Let's explore these principles in the context of the scenarios described.
Faith's response to the employee putting tea bags in his car demonstrates the internal control principle of safeguarding assets. While Faith handled the situation politely, there are concerns about asset protection. A proactive approach, such as ensuring proper storage and inventory management, would align better with this principle and reduce the risk of theft.
b. Assignment of Responsibility and Segregation of Duties:Faith's decision to assign specific tasks to employees on each shift aligns with the internal control principles of assignment of responsibility and segregation of duties. By designating one employee to handle cash transactions while others prepare orders, Faith ensures accountability and minimizes the risk of errors or fraud. This division of tasks enhances the overall control environment.
c. Segregation of Duties:While Faith's insistence on balancing the cash drawer to the penny reflects a commitment to accuracy, the lack of oversight in verifying the counts raises concerns about the internal control principle of segregation of duties. To strengthen internal controls, it is essential to have a secondary review process in place to cross-check cash counts and register tapes, reducing the risk of misreporting or discrepancies.
a. I oppose with Faith's way of dealing with this situation as it has not accompanied the principle of internal asset protection control. Stealing is a major concern. An employee who can explain carrying a box of tea bags is likely to warrant "borrowing" money from the cash register. b. I agree to Faith's method of dealing with this situation since Faith accompanied the principle of internal control of task of responsibility by trying to make one employee responsible for the cash drawer and accompanied the principle of internal control of segregation of duties i.e order preparing from accounting i.e taking orders and payment. c. I disagree with Faith's method of dealing with this situation, as Faith has not accompanied the principle of internal control of separation of duties. It is valid that faith has rendered one employee responsible but for successful internal control after cash counting another employee or Faith itself removes the cash register tape and contrasts the balance with cash drawer. Faith's specification of no mistakes can also motivate the cashiers to overpay a few customers to absorb any possible cash drawer shortfalls.