Internal Controls What Are the Essay

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The need for reconciliation is important here because it allows management to match the transactions with the money taken in for those transactions. The stubs presumably have numbers on them, which would allow management to reconcile specific stubs, but even at that management would have no way to actually track the transaction, it would simply know that a stub was missing, or that there were more stubs than money. So the need for reconciliation is important, but in this case if there is an option for Separation of Duties that would be more important. In addition, reconciliation is only possible if the stubs have the value of the ticket on them -- otherwise it is only possible to know how many customers there are, but not if some of them were seniors, children, students, matinee customers or any other group subject to a discount.

The control objective is to minimize the risk of fraud in the transaction.

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2. Explain to your friend what could happen if the same person did both jobs.

If the same person did both jobs, there is a greater risk that fraud could occur. An obvious scenario would be that the person taking the money could keep some of that money (theft) and dispose of the stubs. This would make it more difficult for management to reconcile the money with the stubs. Even if the person is honest, by having two people involved in the transaction, this acts as a protection against error as well. If the ticket-seller fails to issue a stub, for example, this will be corrected by the ticket-taker. If just one person does this job, the error would go unnoticed. The theater could either lose revenue, or waste time trying to identify the source of the discrepancy that….....

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