1. The petty cash custodian confesses to having "borrowed" $9,010 over the last two years. The custodian promises to repay every penny, with interest, as soon as possible.

2. An employee in accounts payable maintains the accounts payable subsidiary ledger.

3. In June of 2015, STI was notified that their proprietary information would be broadcast on the Internet if they did not pay a $17 million fee. The hacker was caught by the FBI before any damage was done.

4. In November of 2015, STI customers were notified by e-mail that their accounts had been compromised and were being restricted unless they re-registered using an accompanying hyperlink to a Web page that had STI's logo, home page design, and internal links. The form had a place for them to enter their credit card data, ATM PINs, Social Security number, date of birth, and their mother's maiden name. Due to the diligent efforts of Tommy Lew, STI customer information was not breach, according to internal sources.

5. When entering a large credit sale, the clerk typed in the customer's account number as 45982 instead of 45892. That account number did not exist. The mistake was not caught until later in the week when the weekly billing process was run. Consequently, the customer was not billed for another week, delaying receipt of payment.

6. A batch of 73 time sheets was sent to the payroll department for weekly processing. Somehow, one of the time sheets did not get processed. The mistake was not caught until payday, when one employee complained about not receiving a paycheck.

7. Attackers broke into the company's information system through a wireless access point located in one of its trading branches. The wireless access point had been purchased and installed by an office manager without informing central IT or security.

8. To facilitate working from home, an employee installed a modem on his office workstation. An attacker successfully penetrated the company's system by dialing into that modem. Again, due to the diligent efforts of Tommy Lew, sensitive customer information was not compromised, according to internal sources.

9. An attacker gained access to the company's internal network by installing a wireless access point in a wiring closet located next to the elevators on the fourth floor of a high-rise office building that the company shared with seven other companies.

10. A fictitious invoice was received and a check was issued to pay for small supplies that were never ordered or delivered.

11. On the job, Kari Yau got a call from the local police asking why she was sending a caller multiple adult text messages and sexually explicit emails per day. After further investigation, Kari's account records proved the calls were not coming from her phone or email. Neither she nor her mobile company could explain how the messages were sent. After finding no way to block the unsavory messages, she changed her mobile number and quit STI to avoid further embarrassment by association.

12. Based on total 2015 trading commissions of $4,000,000, STI management has forecasted the following monthly growth in trading commissions and monthly cash collection measures for 2016:

12-month cash flow budget in Excel using the following assumptions:

Annual 2015 commissions of $4,000,000 with forecasted monthly growth of 2%

45% of each month's sales for cash; 25% collected the following month; 20% collected 2 months later; 8% collected 3 months later; and 2% never collected

Initial cash balance of $300,000

Assuming an initial cash balance of $300,000, management has concluded that they will achieve an ending cash balance of $41,000,000.

Requirements: Review the issues identified by the Director of STI's internal audit department. For each issue listed above explain why it is a weakness and recommend a way or ways to correct the weakness. Document any assumptions to support your conclusions. For issue #12, evaluate management's conclusion but show calculations to support your decision.

response should be addressed to: Director of Internal Audit - Smart Trading Inc.