Question

E7-5 At Nunez Company, checks are not prenumbered because boththe purchasing agent and the treasurer are authorized to issuechecks. Each signer has access to unissued checks kept in anunlocked file cabinet. The purchasing agent pays all billspertaining to goods purchased for resale. Prior to payment, thepurchasing agent determines that the goods have been received andverifies the mathematical accuracy of the vendor’s invoice. Afterpayment, the invoice is filed by vendor name and the purchasingagent records the payment in the cash disbursements journal. Thetreasurer pays all other bills following approval by authorizedemployees. After payment, the treasurer stamps all bills “paid,”files them by payment date, and records the checks in the cashdisbursements journal. Nunez Company maintains one checking accountthat is reconciled by the treasurer. Identify internal controlweaknesses for cash disbursements and suggest improvements. (LO 2,4), E Instructions (a)List the weaknesses in internal control overcash disbursements. (b)Identify improvements for correcting theseweaknesses.