Following are five separate cases involving internal control issues.

a. Tywin Company keeps very poor records of its equipment. Instead, the company asserts its employees are honest and would never steal from the company.

b. Marker Theater has a computerized order-taking system for its tickets. The system is backed up once a year.

c. Sutton Company has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise.

d. The owner of Super Pharmacy uses a check software/printer to prepare checks, making it difficult for anyone to alter the amount of a check. The check software/printer, which is not password protected, is on the owner’s desk in an office that contains company checks and is normally unlocked.

e. To ensure the company retreat would not be cut, the manager of Lavina Company decided to save money by canceling the external audit of internal controls.

Required

1. For each case, identify the principle(s) of internal control that is violated.

2. Recommend what should be done to adhere to principles of internal control in each case.