P7-2B Each of the following situations has an internal control weakness.

a. Aimee Atkins has been an employee of Mary V's Bridal Salon for many years. Because the business is relatively small. Atkins performs all accounting duties, including opening the mail, preparing the bank deposit, and preparing the bank reconciliation.

b. 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. does the company purchase inventory from the least expensive wholesaler? After a particularly bad year, Design Company eliminates its internal audit department to reduce expenses.

c. CPA firms, law firms, and other professional organizations use paraprofessional employ- ces to perform routine tasks. For example, an accounting paraprofessional might exam- ine documents to assist a CPA in conducting an audit. In the CPA firm of Lee & Dunham. Joseph Lee, the senior partner, turns over a significant portion of his own audit work to his paraprofessional stall.

d. In evaluating the internal control over cash payments, an auditor learns that the pur- chasing agent is responsible for purchasing diamonds for use in the company's manulac- turing process, approving the invoices for payment, and signing the checks.

e. Blake Lemmon owns an engineering firm. His staff consists of 12 engineers, and he manages the office. Olten. his work requires him to travel. He notes that when he returns from business trips, the engineering jobs in the office have not progressed much. When he is away. his senior employees take over office management and neglect their engineering duties. One employee could manage the office. Required 1. Identify the missing internal control characteristic in each situation. 2. Identify the business's possible problem. 3. Propose a solution to the internal control problem.