Each of the following situations has an internal control weakness:

a. Luann Sorelle employs three professional interior designers in her design studio. She is located in an area with a lot of new construction, and her business is booming. Ordinarily, Sorelle does all the purchasing of furniture, draperies, carpets, fabrics, sewing services, and other materials and labor needed to complete jobs. During the summer she takes a long vacation, and in her absence she allows each designer to purchase materials and labor. At her return, Sorelle reviews operations and notes that expenses are much higher and net income much lower than in the past.

b. Discount stores such as Target and Sam's receive a large portion of their sales revenue in cash, with the remainder in credit card sales. To reduce expenses, a store manager ceases purchasing fidelity bonds on the cashiers.

c. The office supply company from which Champs Sporting Goods purchases cash receipt forms recently notified Champs that the last shipped receipts were not prenumbered. Alex Champion, the owner, replied that he did not use the receipt numbers, so the omission is not important.

d. Flowers Computer Programs is a software company that specializes in programs with accounting applications. The company's most popular program prepares the general journal, cash receipts journal, cash disbursements journal, accounts receivable subsidiary ledger, and general ledger. In the company's early days, the owner and eight employees wrote the computer programs, lined up manufacturers to produce the diskettes, sold the products to stores such as ComputerLand and ComputerCraft, and performed the general management and accounting of the company. As the company has grown, the number of employees has increased dramatically. Recently, the development of a new software program stopped while the programmers redesigned Flowers's accounting system. Flowers's own accountants could have performed this task.

e. Lydia Pink, a widow with no known sources of outside income, has been a trusted employee of Stone Products Company for 15 years. She performs all cash-handling and accounting duties, including opening the mail, preparing the bank deposit, accounting for all aspects of cash and accounts receivable, and preparing the bank reconciliation. She has just purchased a new Lexus and a new home in an expensive suburb. Grant Chavez, the owner of the company, wonders how she can afford these luxuries on her salary.
\section*{Required}
1. Identify the missing internal control characteristics 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?