Please complete the chart.

V. Operating Management: Each participating country has a country manager selected by the CEO. The managers report directly to the CFO. The country manager approves quarterly summary reports and forwards them to the CFO with the quarterly financial statements for review and approval. The primary headquarters control and review is a quarterly comparison of budget to actual spending by the CFO and V.P. of Purchasing. The quarterly purchasing reports from the purchasing agents provide a summary of expenditures by the vendor. There is one line for each vendor on the report. If the total purchased from a vendor is under $500, the spend is combined on one line item labeled "All Other." For each line item, there is a brief description of what was purchased from the vendor. If spending does not exceed the budget, the review is not extensive. Background Information The results of your preliminary work are outlined below: Board-Audit Committee: - Bernie Lay serves as both the Chairman of the Board and CEO. Bernie was the CFO for five years before being appointed as the CEO. - The 13 board members are prominent celebrities, politicians, and businesspeople. - The board members are selected by the Chairman of the Board and approved by a majority of the Board. - The five-member audit committee includes the Chairman of the Board and four members appointed by the Chairman for a three-year term. The Board consists of a nominating committee, a risk committee, and a compensation committee. - The Board and the subcommittees meet for one day each quarter. The CFO is responsible for the agenda and financial reports. - The Chief Audit Executive (CAE) and the external audit partner share a onehour slot on the agenda at each meeting. Temple and Duncan (T\&D) have been the low bidder the last three times the organization has requested attest proposals. The external auditor proposals are reviewed by the CFO, who recommends a firm to the Audit Committee for approval. Tyronco represents 60% of T\&D's audit and 80% of their consulting revenues. As part of a cost-cutting move, internal audit sources the collections, payables, and purchasing audits to Temple \& Duncan. The CEO believes that the external and internal auditors should be able to complete most of their audit work from headquarters by utilizing technology. Therefore, only 23 site visits are made per year. V. Operating Management: Each participating country has a country manager selected by the CEO. The managers report directly to the CFO. The country manager approves quarterly summary reports and forwards them to the CFO with the quarterly financial statements for review and approval. The receiving clerks and distribution manager report to the purchasing agent in their respective countries. Inventory status reports are issued quarterly to the V.P. of Purchasing, who prepares a summary report for the CEO \& CFO. Inventory shrinkage has increased from 2% to 3% over the last five years, with the best country at .5\% and the worst at 6%. Requirement: What are your most significant areas of concern as an internal auditor? You should be able to come up with at least eight risks (no more than two in any of the seven sections above). List the controls you would expect to find to mitigate the risk. For the COSO Principle, pick one of the 17 internal control principles which are most applicable. You can use the table format below. Please ensure enough descriptive The Tyronco Foundation operates worldwide to provide food and medicine to needy individuals in third-world countries. Thirteen countries currently receive assistance through the program. The number of individuals who benefited has increased from 407,000 in 2000 to over 721,000 in 2019. Data for current years are still being tabulated for annual reporting. Contributions are received from foundations, agencies, governments, and individuals. Tyronco outsources the marketing and collection processes. The marketing agency publicizes the benefits and collects donations. The bylaws require that 75% of the funds collected to be distributed directly to benefit the needy (benefit expenses). The administration expenses cannot exceed 25% of contributions. Tyronco's marketing efforts highlight the guaranteed high percent payoff to the needy. The governing agencies of several countries require that the attest auditors include the 75% goal in the financial audit. \begin{tabular}{|l|l|l|l|} \hline ITEM & RISK & COSO PRINCIPLE & CONTROL(S) \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} The purchasing function is decentralized with a purchasing agent located in each of the 13 countries that qualify for food and non-prescription medicine. The V.P. of Purchasing at headquarters has requested that the 13 purchasing agents purchase 50% of all items from vendors in the same country as the recipients. The agents operate somewhat autonomously and can sole-source or utilize competitive bids. Local purchases are typically 2030% higher than a competitive bid process. The CEO supports this approach since he feels it establishes good relations with local government officials and businesspeople. Purchasing agents are provided with a quarterly budget based on the recipients' demographics. Adjustments are made to the budget based on actual contributions received from countries, organizations, foundations, and personal sponsors. The increase in purchases has been approximately 13% per year but varied from a low of +7% to a high of +21% between countries. The CEO, Bernie Lay, has a military background and has established an autocratic management style. He feels that this approach will develop a more efficient and effective structure for a decentralized organization. The CEO has recently determined that distribution costs, which account for 10% of total costs, should be reclassified from administrative expense to benefit costs since distribution benefits the needy. III. Chief Financial Officer: Scott Z. Best, the CFO, previously served as the supervisor of accounts payable and was promoted by the CEO. When he worked for the attest auditors, he was the manager in charge of the Tyronco account. He maintains a strong working relationship with Temple and Duncan, a small regional firm in Geneva