Jason Company, a small electronics distributor, has experienced kisses of inventory over the past year. Sara Jason, the owner, on the advice of her accountant, has adapted a set of internal controls in an effort to stop the losses. Jason has taken the following steps:

1. She encourages employees to follow the rules.

2. She regularly considers ways in which inventory kisses might occur.

3. She put separation of duties in place.

4. She gathers appropriate information and communicates it to employees.

5. She sees that new and existing employees are well trained and instructed in their duties.

6. She makes sure inventories arc physically protected with kicked storage and electronic monitors.

7. She observes and reviews how procedures by those who report to her arc carried out.

8. She had her accountant install a better accounting system over inventory.

9. She trains new employees in how to properly carry out control procedures.

Required

1. Show that Sara Jason’s new system engages all the components of internal control by matching each of the above steps with one the of the internal control components below:

a. Control environment

b. Risk assessment

c. Information and communication

d. Control activities

e. Monitoring

2. As the owner of a small company, why is it important that Sarah Jason take an active part in the management of the internal control system?