Internal Controls All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods, such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in delivery frequency from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter the description or change the quantity on an invoice in order to explain the cost on the bill. Answer the following True or False questions about the company's internal controls. These will assist you in determining the weaknesses. Purchases should be initiated by a requisition document. An acc True yable derk should match the requisition, purchase order, and Invoice before any payment is made False The in borcerrould have been delivered directly to the accounts payable derk to avoid corrupting the document A former chairman, CFO, and controller of Donnkenny, Inc., an apparel company that makes sportswear for Pierre Cardin and Victoria Jones, pleaded guilty to financial statement fraud. These managers used false journal entries to record fictitious sales, hid inventory in public warehouses so that it could be recorded as "sold," and required sales orders to be backdated so that the sale could be moved back to an earlier period. The combined effect of these actions caused $25 million out of $40 million in quarterly sales to be phony. a. Why might control procedures listed in this chapter be insufficient in stopping this type of fraud? b. Would an audit committee made up of representatives from senior management be effective in stopping this type of fraud