Rita and her mother Rosa own and operate Freeze Hub, LLC, a company specializing in freeze-drying flowers from clients’ memorable events, such as proms and weddings. The company not only freezes the flowers, but also presents them in a variety of display packages. Each of these packages includes materials such as glass and frames that Freeze Hub purchases from local suppliers. In addition to supplies for display, the company purchases office supplies and packaging material from several vendors. Given the COVID-19 pandemic, business has been unusually brisk.

Freeze Hub uses a low-end accounting software package to prepare documents and reports. If any of the sixty employees note a need for supplies and materials, they inform Rita or Rosa, who act as office manager and company accountant, respectively. Given the pandemic, Rita hired Ricky, Rayshawn and three other staff including Rui to help when needed. When purchases are needed, either Rita or Rayshawn or another staff member enters order information into the accounting system to create a purchase order that is faxed to the last vendor used. Occasionally, Rita or Rosa will also call the suppliers if there is something special about the product ordered.

When ordered materials and supplies arrive at Freeze Hub’s factory, either Rita or Rosa and on some occasions Ricky and others check the goods received against the packing slip. Either Rita, Ricky or Rayshawn enters the new inventory into the computer system.

Rosa pays bills twice monthly. She checks the computer system for invoices outstanding, and collaborates with Rayshawn to verify that the goods have been received. She or Rayshawn then enters any information needed to produce printed checks from the accounting system. Freeze Hub mails checks and printed remittance advices (portions of the vendor bill to be returned) to suppliers.

Also, during a ZOOM meeting with Rita and Rosa, you discovered:

• Purchases of specialized goods and services are negotiated directly between the user department and the vendor. Company procedures require that the user department and the purchasing department approve invoices for any specialized goods and services before making payment.
• All approved invoices are filed alphabetically.
• Pre-numbered blank checks are kept in a locked safe accessible only to the cash disbursements department. Other documents and records maintained by the accounts payable section are readily accessible to all persons assigned to the section and to others in the accounting function.
• Management backs up the accounting software every six to nine months.
• To address recent concerns related to the pandemic, Rita and Rosa are considering adopting the use of facial recognition technology for everyone at Freeze Hub. Face recognition is a method of identifying or verifying the identity of an individual using their face. Rita’s and Ricky’s apartment complex uses facial recognition software for tenant visitors. The software has been 99% accurate in the positive identification of tenants visiting this apartment complex.
• While the accounting software is low-end, it is compatible with and allows connections to Adobe, Canva, eBay, Equifax, Heartland Payment Systems, LinkedIn, MySpace, NetEase, Yahoo and Zynga. Freeze Hub is considering enhancements to its accounting software.

Requirements: In an oral and written presentation to management, discuss your proposal to address concerns regarding Freeze Hub’s purchase and payment processes. Specially,

1. Document any questions you have for Freeze Hub management

2. For each internal control weakness identified, explain why you believe it is a weakness and recommend a way to correct the weakness