In August 2013, Miriam noticed that some of the client accounts were becoming seriously depleted without any apparent reason. In addition, clients' petty cash accounts were being used more often than usual. The Legal Ser- vices department notified Miriam of changes to clients' wills that, while not unusual, weren't frequent occurrences. Miriam wanted to investigate these apparent anomalies and make the necessary changes.

Address each of the following questions:

1. In general, what are the major objectives of internal control? What is their purpose?

2. What are the risks associated with providing financial services such as those of a trustee? Classify each risk as

(1) High (2) Medium (3) Low

3. Review the processes outlined in the case and indicate where:

a. Controls should be in place but do not exist, and

b. Controls are in place but aren't working effectively.

4. For each of the controls that are in place, or should be, identify whether that control is preventive or detective.

5. Was NCT's senior management adequately performing its fiduciary responsibilities on behalf of its clients? Give an example of how it was, or was not, meeting its responsibilities.

6. What are the ethical responsibilities of senior management toward its clients?

7. How would you test whether inappropriate activity (potential fraud) had occurred?