Featherbed surf and leisure holidays Limited is a resort company based on Vancouver Island. It's operations including boating, surfing, fishing and other leisure activities; backpackers hoste; a family hotel and a five star resort. Justin and Sarah Morris own the majority of the shares in the Morris group, which controls featherbed. Justin is the chair of the board of directors of both featherbed and Morris group, and Sarah is a Director of both companies as well as the CFO of featherbed.

Justin and Sarah have a fairly laid$-$back management style. They trust their workers to work hard for the company and they reward them well. The accounting staff, in particular, are very loyal to the company. Just tell you that some accounting stuff enjoy the job so much that they have never taken holidays, and they rarely takes sick leave. Justin and Sarah have not bothered much in the past with formal procedures when policies, but they have requested that the accounting staff start documenting the more common procedures. Just and Sarah do not conduct formal performance reviews; rely on their staff to tell them when there was a problem.

There are three people currently employed as accountants, the most senior of whom is Peter Pan. Peter has the accounting department and reports directly to Sarah. He is in his $50$s and plans to retire in two or three years. Peter prides himself on his ability to delicate most of his work to his two accounting staff, Kristen and Julie. He claims he has to do this because he is very busy developing up policy and procedures manual for the accounting department. The delegated work includes opening mail, processing payments and receipts, banking funds received, performing reconciliations, posting journals, and performing the payroll function. Julie is a recently graduated chartered professional accountant. Kristen works part time $$ coming into the office on Mondays, Wednesdays, and Fridays. Kristen is responsible for posting all journal entries into the accounting system and the payroll function. Julie does the balance of the work, but they often help each other out and busy periods. Kristen authorizes Julie's transactions, and Julie returns the favour by authorizing Kristen's transactions. Together, they usually make the account balance.

Required$-$ Assess the internal controls at Featherbed. What changed do you recommend?