Sheer Madness

Name: Kast

Sheer Madness Questions for Reflection

Each question below should have a complete, well-thought out response. Please make sure that your responses specifically pertain to the Shear Madness case (i.e. Your response should be more specific and less general). Format your response file exactly like this sheet (i.e. Same headers, footers, margins, type font, etc - per APA format). Please re-type each question along with your response as indicated below by the first question:

What is “segregation of duties”? Segregation of duties is . . . . . . . . . a basic building block of sustainable risk management and internal controls for a business. The principle is to share responsibilities of a key process among people/departments.

Given your answer to the above question, which particular duties being performed by Daphne of the case should have been segregated? Explain. The cash-handling and accounting duties should have been segregated. Any one employee who is responsible for both has the opportunity to steal cash and conceal the theft.

Given your answer to the question above, name at least one additional way that the current control system that was in place at Shear Madness provided the receptionist with an opportunity to steal. Please comment on how the system could be changed to eliminate this risk. Daphne’s access to all documents and information in the transaction process provides her with an opportunity to steal. The individual handling the flow of cash should be separate from the individual with access to records. In addition, all transactions need to be cross-checked by separate entities.

Susan gave Steve control of the lockbox key. By doing this Susan was instinctively trying to design a system that prevented unauthorized access to the cash box. What could Susan have done differently to make this a more effective control procedure? Susan could have practiced smarted hiring practices and/or separated control of the lockbox key to a party...