Land of Wood and Water Jamaica Company Limited (LWW) is a publicly-traded company with headquarters in Kingston, Jamaica. Land of Wood and Water Jamaica Company Limited specializes in distilled water bottling and distribution. Despite being listed on the Jamaica Stock Exchange for over twenty (20) years, LWW still faces difficulty retaining a chief financial controller (CFO). The company has changed three CFOs in the last four (4) years. The high turnover has significantly affected the company's ability to achieve its financial and reporting objectives. Despite the previous challenges faced by LWW, the management is optimistic that the new CFO, Fabian Grant, will be able to meet their financial objectives and bring the accounting records to the required standard. Fabin previously worked with Highest Peak Water Company Limited as an Accounting Manager and has extensive knowledge of the water bottling and distribution industry. He is concerned about the poor state of controls at LWW. The internal controls at both the entity and transaction levels were ineffective. The internal controls are not meeting the objectives of compliance with laws and regulations, reliable financial reporting, and efficient and effective operations. Fabian is specifically concerned about internal controls over sales, accounts receivables, and payroll. Sales representatives are responsible for approving credit, which is outside of their scope of work. The sales representatives are also responsible for setting up the customers and writing off outstanding account balances. Sales representatives take an average of five (5) days to upload records to the accounting system or to provide supporting documents to accounts receivables for credit sales. Before the Covid19 pandemic, management required weekly update of the accounting records supporting sales transactions. However, the accounting clerks are mostly now working from home because of the Covid19 pandemic, and are updating the records in ten (10) to twelve (12) business days. Fabian also observed that there is no formal system to verify the time-keeping records for employees. Employees submit their time sheets without the signatures of their supervisors, and overtime is higher than the regular salary expense. The total salary expense has doubled in the last year, and the LWW has a significant obligation for outstanding vacation pay. The employees have an average accumulated vacation leave of 60 days. During the first week of employment at LWW, Fabian called an urgent meeting with the management to discuss the poor controls. The management of the company expressed that the company does not have the resources to employ any additional staff. In the meeting, John Woods, The Chief Executive Officer (CEO) told John that the company did see the need for a formal authorization system and financial oversight at the board level. John also stated that he expects Fabian to not only oversee the recording of transactions, but also to oversee the internal audit reviews. However, Fabian suggested to management that LWW access the business loan offered by the Government of Jamaica to purchase the necessary hardware and software so as to reduce the need for additional human resources in the areas of credit, payroll, sales, and accounting. Fabian also told John that his responsibilities do not include oversight over internal audits and that the financial statements must be ready to meet the Companies Office of Jamaica and Jamaica Stock Exchange deadlines. He reminded John that the company is at risk of losing its ability to trade on the Jamaica Stock Exchange because of its poor controls over financial reporting. Fabian is starting to think about whether it was the right decision to join the staff at LWW, as the weak internal controls coupled with the poor tone at the top will make his job extremely difficult. Required: a) To achieve Land of Wood and Water's control objectives, Fabian believes that management must quickly implement entity and transaction level controls so as to comply with the Company's Act of Jamaica and Jamaica Stock Exchange. i. Identify four (4) areas at LWW that violate proper transaction level control procedures (6 marks) ii. Identify two (2) areas at LWW that violate proper entity-level control procedures. (3 marks) 2 of 4 iii. iv. V. For each of the violations identified in (i) above gives an example of how LWW can correct each weakness. (6 marks) Given the limit on employing additional human resources, recommend two functions that management should automate to improve its transaction-level controls (4 marks) What are four (4) potential risk implications for LWW due to the weak control environment? (6 marks)