You have been appointed to audit GTH Ltd, a local restaurant that has recently opened. The owner and head chef of the restaurant is Helen Betts. Helen is a wonderful cook but possesses little knowledge of business and business practices. As a result she has a tendency to trust her employees . . . perhaps a little too much.
At the restaurant the waiters are given a note pad each day on which to take orders. The sheets are turned over to the kitchen to prepare the orders as instructed. The waiters then deliver the prepared meal to the customer. When the customers are ready to leave, the waiters merely sum up the total bill and take the cash.
Since there is no cashier, the waiters tender change to the customers from sums they have received. The restaurant does not accept payment by cheque and/or credit cards.
At the end of the day the waiters tender their net cash receipts to Helen who then banks the cash.
Recently Helen remarked that even though she was always busy in the kitchen, daily sales have not been as high as expected. Indeed, because of the cash flow problems being experienced by the business, Helen is now considering closing it down.
Required
Explain to Helen what internal controls need to be implemented over cash sales and offer a possible explanation as to why the business is experiencing cash flow problems.