Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 31

Internal controls
The following is an excerpt from a conversation between two salesclerks, Jean Moen and Sara Cheney. Jean and Sara are employed by Turpin Meadows Electronics, a locally owned and operated electronics retail store.
Jean: Did you hear the news
Sara: What news
Jean: Neal and Linda were both arrested this morning.
Sara: What Arrested You're putting me on!
Jean: No, really! The police arrested them first thing this morning. Put them in handcuffs, read them their rights-the whole works. It was unreal!
Sara: What did they do
Jean: Well, apparently they were filling out merchandise refund forms for fictitious customers and then taking the cash.
Sara: I guess I never thought of that. How did they catch them
Jean: The store manager noticed that returns were twice that of last year and seemed to be increasing. When he confronted Neal, he became flustered and admitted to taking the cash, apparently more than $9,000 in just three months. They're going over the transactions of the last six months to try to determine how much Linda stole. She apparently started stealing first.
Suggest appropriate control procedures that would have prevented or detected the theft of cash.