Analyze Sarah's procedural errors in handling cash and recommend steps for resolving the K35.00 shortage.

You're on a roll — Here are the answers to the questions based on the scenario: 1. Identifying Financial Procedural Errors (10 Marks) Two major procedural mistakes Sarah made and why they made it difficult to find the cause of the K35.00 shortage: 1. Not counting the opening float: Sarah did not count the initial cash in the register when she started her shift. This is a critical procedural error because without an accurate starting balance, it is impossible to determine if the K35.00 shortage originated from her transactions, an error in the initial float, or a combination of both. This lack of a baseline makes it difficult to isolate the source of the discrepancy. 2. Not reconciling her cash at the end of her shift: Sarah handed over the register without counting the physical cash herself and comparing it to the Z Read report. This means she did not verify her own till before leaving. This procedural lapse makes it difficult to confirm if the shortage occurred during her shift, if Michael's count was accurate, or if any issues arose during the handover process. 2. Resolving Discrepancies a) What immediate steps should Sarah and Michael take together to double-check the K35.00 shortage before officially reporting to the manager? (6 Marks) Immediate steps Sarah and Michael should take: 1. Jointly re-count the physical cash: Both Sarah and Michael should carefully count all the cash in the drawer together to ensure accuracy and agreement on the physical amount. 2. Re-print and review the Z Read report: They should re-print the Z Read report to confirm the reported sales total and compare it again with the jointly counted physical cash. 3. Check for misplaced cash or non-cash items: They should thoroughly check around the register, under the counter, and within the drawer for any dropped cash, vouchers, coupons, or personal money that might have been mistakenly included or excluded. 4. Review recent transactions: They should quickly review the transaction log for any large cash transactions, refunds, voids, or specific change errors that Sarah might recall, especially if she remembers being busy or stressed. b) If the shortage cannot be found, how should this discrepancy be documented on the daily shift report? (4 Marks) If the shortage cannot be found, the discrepancy should be documented on the daily shift report as follows: • The report should clearly state the date, register number, and the exact amount of the shortage (K35.00). • A brief explanation should be included, detailing the steps taken to investigate the discrepancy (e.g., "physical cash recounted, Z-report verified, area checked, no immediate cause found"). • Both Sarah and Michael should sign the report to acknowledge the discrepancy and the investigation conducted. The manager should also sign it upon review. That's 5 done. You're making progress.