Lombard Company is a young business that has grown rapidly. The company's bookkeeper, who was hired two years ago, left town suddenly after the company's manager discovered that a great deal of money had disappeared over the past 18 months. An audit disclosed that the bookkeeper had written and signed several cheques made payable to the bookkeeper's brother and then recorded the cheques as salaries expense. The brother, who cashed the cheques but had never worked for the company, left town with the bookkeeper. As a result, the company incurred an uninsured loss of $84,000.

Evaluate Lombard Company's internal control system and indicate which principles of internal control appear to have been ignored in this situation.