During the audit of Talbot Company, the auditor found a purchase from a vendor that was not on the

approved list of vendors. This was considered an unusual type of transaction. The auditor advised the controller about this transaction who explained that the transaction was small manufacturer of odd parts that other suppliers cannot provide.

The controller told the auditor that he was aware of the transaction, but that he did not tell anyone about it as he did not want to cause trouble for the employee who had mistakenly made the purchase. He stated that the former purchasing manager who had authorized the purchase was now retired, so the problem would never happen again.

Required

Clearly identify and explain the matters that should be communicated to the audit committee.