Case Study Azus Corporation manufactures and sells several different lines of small electric components. Its internal audit department completed an audit of its internal control process. The auditors noted the following items:

a. A payroll clerk recorded a 40-hour workweek for an employee who had quit the previous week. He then prepared a paycheck for this employee, forged her signature, and cashed the check.

b. A cashier prepared a fictitious invoice from a company using his brother-in-laws name. He wrote a check in payment of the invoice, which the brother-in-law later cashed.

c. An employee of the finishing department walked off with several parts from the storeroom and recorded the items in the inventory ledger as having been issued to the assembly department.

Required:

a. Explain how the principle of separation of duties is violated in each of the following situations. (6 points: 2 points for each item)

b. Suggest one solution to solve the problem and exposure highlighted on question (a) for each item. (6 points: 2 points for each item