As part of the audit procedures for the external audit of SSM Inc., Robert reviewed Sam's audit notes (Sam is a CPA student employed at Robert's firm). SSM has been audited by Robert's firm for the past 3 years, and Robert is now a manager at the firm. Robert is concerned about the poor work shown in Sam's procedures. In particular, he is concerned about Note 1 (see below) he has documented in the current file and a working paper prepared by Sam:

Note 1. Sales returns have weak internal controls; I compared last year's balance to current year and found balances were similar to last year. Interviewed the marketing manager who said that sales this year were poor and the company also experiences sales returns. Conclusion: Based on sample results, I do not accept this account balance.

The following is Sam's bank reconciliation working papers:

G & COMPANY CPAs

Bank Reconciliation

Bank account balance as at December 31, 2018$65,000

Deposits in transit$4,200

Outstanding cheques$1,900

Adjustments to bank account balance$2,300

Adjusted balance$67,300

Cash account balance per general ledger$ 67,300

Required:

a. Assume that Sam made a mistake when evaluating the internal controls, and that actually the controls for sales returns were very strong and there were no material misstatements in the account. Briefly explain how Sam's audit conclusion would affect the audit of SSM if no one had reviewed Sam's work.

b. Identify six deficiencies in Sam's bank reconciliation working papers.