Please read the narrative below for the Expenditure cycle. You will need to evaluate the companys internal controls for the expenditure cycle and make the recommendation that best mitigates this problem.

Beth is a consultant hired by the CEO of Jensens Sports Equipment Company. This company orders and sells sports equipment to individual, government, and corporate customers. After talking to the accounting department, Beth has documented the following processes that currently occur at Jensens:

The Jensen company has a separate Purchasing department that issues Purchase Orders (POs) for items. The purchasing department decides what to order based on sales projections. In addition, purchasing agents also order items at least every quarter to make sure they dont run out of stock. The purchasing employees issue a PO to vendors that are only on the approved vendor list. The purchasing department sends a copy of the PO to the warehouse and to accounting. When the goods are received in the warehouse, the receiving employees only receive the shipment if there is a PO for the goods. The receipt is logged onto a daily receiving report with a copy delivered to the accounting department. They then move the inventory to an area in the warehouse to get it out of their way. It is eventually moved to the warehouse shelves if someone in the company has extra time. Since Jensens is a small company, any employee is able to go and check the inventory levels or talk to warehouse personnel if they have questions about inventory or reports. Once the vendor invoice is received, the accountant will match to the PO and Daily receiving report and process the invoice in the accounting system. Vendor invoices are paid each Friday and the inventory and A/P is posted on that date in the system. Checks signed by the owner of the company. The vendor invoice is then stamped paid and filed in the vendor file. The bank reconciliation is done anyone in the accounting department that has time.

After further discussions with the accounting staff, they have mentioned that in the past the warehouse seems to have high levels of discontinued items. Upon further review it appears that the purchasing department was not looking at the new products and discontinued products report from management. Beth also noticed that the accounting department has had to credit customers for poor quality products shipped to customers.

Required: Identify the 5 internal control problems that are specific to this scenario (2 pts each) meaning that if it is not mentioned, then do not assume that the problem exists. In addition, make 5 recommendations that best mitigates each problem (2 pts each). The evaluation is an open book (Ch 11), open note, individual problem.

Your answer should be in a format listing out the 5 issues/recommendations as follows:

1. IC Problem

IC Recommendation

2. IC Problem

IC Recommendation

Etc.