Each of the following situations has an internal control weakness.

a. In evaluating the internal control over cash disbursements, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work.

b. Todd Wagoner owns a firm that performs engineering services. His staff consists of 12 professional engineers, and he manages the office. Often his work requires him to travel to meet with clients. During the past six months he has observed that when he returns from a business trip, the engineering jobs in the office have not progressed satisfactorily. He learns that when he is away several of his senior employees take over office management and neglect their engineering duties. One employee could manage the office.

c. Amy Fariss has been an employee of Griffith's Shoe Store for many years. Because the business is relatively small, Fariss performs all accounting duties, including opening the mail, preparing the bank deposit, and preparing the bank reconciliation.

d. Most large companies have internal audit staffs that continuously evaluate the business's internal control. Part of the auditor's job is to evaluate how efficiently the company is running. For example, is the company purchasing inventory from the least expensive wholesaler? After a particularly bad year, Campbell Design Company eliminates its internal audit department to reduce expenses.

e. CPA firms, law firms, and other professional organizations use paraprofessional employees to do some of their routine tasks. For example, an accounting paraprofessional might examine documents to assist a CPA in conducting an audit. In the CPA firm of Dunham \& Lee, Cecil Dunham, the senior partner, turns over a significant portion of his high-level audit work to his paraprofessional staff.

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1. Identify the missing internal control characteristic in each situation.

2. Identify the business's possible problem.

3. Propose a solution to the problem.

4. How will what you learned in this problem help you manage a business?