Answer Happy

Carmel Harrison runs Emerald Spa, a business providing women-only hairdressing, beauty, relaxation massage, and counselling services in a small tourist town. Ninety percent of the clients using the beauty and massage services at Emerald Spa are weekend visitors to the town, but 80 percent of the hairdressing and counselling clients are locals. The massage therapist and counsellor have formal qualifications and are registered with the medical authorities, allowing clients to claim the cost of the service with their private health insurer if an appropriate receipt is provided when the client pays. Emerald Spa has just opened another branch of the business in a town 100 kilometres away, and there are plans for a third branch to be opened next year. Carmel has been very busy establishing the new branch, and she relies on staff in each office to run the day-to- day operations, including ordering supplies and banking receipts. In addition, the branch manager organizes the staff and authorizes their time sheets. Carmel makes the payments for rent, power, salaries, and large items of expenditure, such as furniture purchases.
* Your answer is incorrect. Which of the following explain what could go wrong with these transactions if the system of internal controls do not meet any of the seven generally accepted objectives of internal controls? ✓ The cashier uses incorrect pricing for customer services. There is no code of conduct. ✓ Services are provided by the massage therapist, but they are not charged to the medical provider or the customer. Carmel has been so busy establishing the new branch that she has not assessed the risk that a new massage clinic has opened a block away from the first location. ✔ Not all cash receipts are deposited intact in a timely manner. Carmel has been ordering the wrong supplies. O Carmel recognizes there is a weak internal control over the inventory on hand.