Judy is the assistant controller of Retake Ltd. Due to new business, the controller has been very busy, and she delegated signing authority for cheques to Judy. Due to the cash accountant leaving on maternity leave, Judy was asked to perform the bank reconciliation until they found someone to replace the cash accountant.

Judy is a CPA and has been able to handle these additional tasks. However, she asked her boss for a raise to compensate her for the additional responsibilities. Her boss indicated that money is tight right now due to the need for more working capital, and this is only a temporary situation. She offered Judy some Tim Hortons gift cards.

Judy created a vendor in the system using her own address. She has been paying this vendor $2,000 for the past 3 months as a means of compensating herself. This is not considered a large amount compared to other payables. This theft has yet to be discovered by Retake. The controller and the boss are very busy.

Required

What internal controls are missing that enable the theft to occur?

Provide three audit procedures that might detect the theft.