Several days prior to completing field work at Ansonia Wire & Cable Co., the engagement partner. Colleen Kelly, discusses with Ansonia's CFO, Alan Rothstein, reportable conditions that her audit staff detected while considering internal control and that she plans to include within the firm's letter communicating reportable conditions to the board of directors. Kelly reveals five reportable conditions and explains to Rothstein that one, approval initials on the face of invoices prior to payment, is—and will be communicated in the firm's letter as—a material weakness in internal control. Rothstein, visibly upset, argues that the reportable condition is not a material weakness.

Required: 

Discuss each of the following:

1. What is Kelly's argument?

2. Why would she care?

3. What is Rothstein's argument?

4. Why would he care?