The following "conditions" are excerpts from a report of an operational audit of a company's human resources department:

Condition I: The company's payroll is prepared by the human resources department.

Condition II: The firm's human resources manager is the proprietor's son, who has one year of experience in the human resources field.

Condition III: The distribution of payroll checks is made by the human resources department.

Condition IV: The human resources department makes a quarterly test of all personnel records to be assured that all required documentation is present.

Condition V: Personnel hiring is initiated by the human resources department only upon the receipt of a request from the user department. The request must be signed by the user department manager or assistant manager.

Condition VI: When documentation supporting a particular human resources action is received by the human resources department, a human resources clerk is assigned the task of making the appropriate changes on the file(s) affected. No one, at any time, is assigned the task of verifying that the entries are correctly transcribed.

The internal auditor is preparing a "recommendations" section for the report. The following controls are to be used: (1) competence and integrity of personnel, (2) segregation of incompatible functions, (3) execution of activities, (4) proper recording of events, (5) appropriate limitation of access to assets, and (6) comparison of existing records with records required. The internal auditor notes that one of the controls is addressed by each of the six conditions identified.

Required:

a. Identify the control most directly addressed, using one policy or procedure per condition with no repeats.

b. State whether or not that control is violated by the condition.

c. If the control is violated, describe the possible consequences of any such violation.

d. If the control is violated, prescribe one corrective action for any such violation.
Use the format shown below:

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Condition I. II. III. IV. V. VI. a. b. C. d. Possible Corrective Action Needed Control (1)-(6) Violated? Consequences