1. On the current asset section of the Balance Sheet, there are accounts called liquid assets which means that they can easily be converted to cash, are volatile to fraud and misappropriations; and easily be stolen. It is imperative that management implement internal controls that would protect their liquid assets from misappropriation. What internal controls would management implement to protect this asset and the reasons why?

2. It was noted that in the sales department management can override the internal control of the accounting department and has the authority to monitor the physical of inventory and the reconciliation thereof. What internal control should be established here? What roles and responsibilities should NOT be assigned to the Sales Manager?

3. You are the Manager of Internal Control. During an audit, several internal control weaknesses were identified, which were discussed with President of the organization. At the conclusion of the discussion, he informs you that that there is no reason for you to inform the Board of Directors. He states that he believes they should not have to deal with major policy decisions and not to burden them with the day-to-day management problem. How would you respond to this suggestion? Explain fully. (3 Marks)

4. In terms of internal control, what is a management letter and what is its significance?