An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using
A) Employee fidelity bonds.
B) Independently prepared mailroom prelists.
C) Daily check summaries.
D) A bank lockbox system.

Question

Quizplus · Accepted Answer

A bank lockbox system is the best choice to reduce the risk of employee misappropriation of cash in this scenario. In a bank lockbox system, the customer remittances are sent directly to a bank-controlled post office box. The bank then opens the mail, deposits the checks into the company's account, and provides the business with a summary of the remittances received. This method eliminates the need for employees to handle cash and significantly reduces the risk of theft or misappropriation. The other options (employee fidelity bonds, independently prepared mailroom prelists, and daily check summaries) may provide some level of protection but are not as effective as a bank lockbox system.

An Entity with a Large Volume of Customer Remittances by Mail