For each transaction write Principle and focus point under control environment :Transactions

Purchase: Lululemonn does not own or operate any manufacturing facilities, so they rely on a limited number of suppliers to provide fabrics or other raw materials for, and to produce, their products. This transaction with their vendors affects cash, accounts payable, and inventory on the financial statement.

Sales: Lululemon has various types of ways to sell their products, which include direct consumers all around the world, wholesales, outlets, etc. This transaction affects the cost of goods sold on the income statement; inventory, cash, and accounts receivable on the balance sheet could also be affected.

Inventory: high$-$quality materials or products from their vendors and sell them to consumers.

Analytical Procedure

COSO Framework

Transaction $1$: Purchase

Objectives

$1.$ Identify and manage the risk associated with the purchase methods of Lululemon by establishing the internal control plan to obtain reasonable assurance regarding the achievement of the overall organizational and other business objectives of Lululemon.

$2.$ Effectiveness and efficiency of purchase operations

Orders are approved by authorized person

Ensure orders are made timely

Materials are purchased to meet the requirement

Materials are purchased at appropriate price

$3.$ Accurate, relevant, and reliable information associated with purchase operations

All purchased materials were ordered, processed accurately, and recorded on time.

All returns and allowances are authorized and were processed accurately and recorded timely.

Receipts for ordered materials are properly authorized, prepared, and recorded.

Approved changes to data files are recorded accurately and timely.

Potential risks related to the purchase transactions affect reaching the objectives and measuring the risk.

Unauthorized personnel approve orders, leading to unauthorized spending and potential financial discrepancies. It could affect the accounts payable on the balance sheet, and its existence could be affected. At this time, the likelihood and magnitude could be high.

A delay in getting an order and processing it leads to inventory shortages or setbacks for sales and production.

Failure to procure materials that conform to standards of quality and characteristics for the required product, thereby compromising quality and customer satisfaction.

As a subset of those steps, sourcing raw materials at prices higher than the market involves less cost efficiency and reduced margins.

Errors in the orders processed, which, in turn, would have consequences in inventory and financial records and, potentially, in disputes with suppliers,.

Improper or fraudulent returns and allowances lead to incorrect financial statements and, potentially, the loss of revenue.

Purchase orders that have been authorized but for products that were never received, and reversed order entries that leave the inventory records out of date.

Unauthorized alterations of the purchase data files put data integrity at risk, enabling fraud and possibly leading to financial ruin.

Supplier non$-$compliance with contractual terms or delivery schedules, operations shut down or slowed down, and production and sales negatively affected.

Non$-$compliance with export regulations could potentially result in fines, penalties, and damage to Lululemon's reputation.

Write clearly the principle under the control environment and it's focus point. Then relate to sll $3$ transactions seperately.