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You are currently part of a university work experience program. Your job placement is at...

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Accounting

You are currently part of a university work experience program. Your job placement is at the municipal transit centre. Your supervisor is responsible for the recording and distribution of monthly transit passes to authorized vendors throughout the city. The vendors pay 50 per bus pass and sell them for 55. Your job is to prepare a monthly reconciliation of the transit passes including the quantity sold, the number actually distributed, the unsold passes, and the cash proceeds. You are unable to reconcile the past two months. The bus passes are sequentially numbered and, in checking the sequence, you notice that numbers 9750 to 9820, 11012 to 11750, and 22000 to 22440 cannot be accounted for. You bring this to the attention of the supervisor, who tells you that reconciliations are never done; the job was created by her superior to give you something to do and you are told not to worry about it.

  1. What is the main objective of internal control and how is it accomplished?

  2. Why should recordkeeping of assets be separated from custody over the assets?

  3. Quantify the potential error that the missing bus passes could create. Should you report your findings?

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