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Howard Street Jewelry Accounting Case Study on Internal Controls

1. The main internal control concept the Levis ignored was segregation of duties. No one
person should be responsible for all transactions from the beginning to the end. Betty had too
many responsibilities that were interwoven and should have been performed by more than one
person. She handled the cash that came in, maintained the cash receipts and the sales
records. Another concept that this relates to is that no one individual should perform more
than one of the following; recording transactions, authorizing transactions and maintaining
custody over the assets. Betty was able to do all three; selling jewelry, putting items in
layaway, recording sales, maintain cash receipts and accepted the cash. Betty was allowed to
have incompatible duties which allowed her to commit fraud of $350,000.

2. The case states that the CPA served as their accountant for almost 40 years providing
a wide......

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Approximate Word Count: 985
Approximate Pages: 4 (250 words per double-spaced page)

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