Q$1.$ A small state agency has four employees: an executive director, a deputy director, a fiscal analyst $($FA$),$ and an administrative assistant $($AA$).$ All employees have been with the agency since it was formed about two years ago.

The agency has been using purchase cards for about a year. The FA and AA each have a purchase card that they ordered themselves. They also each set their own spending limits on their cards. They each order goods and services. They are careful to follow the state purchasing rules and use state contracts whenever possible. The FA and AA each verify that their own goods and services were received and sign the packing slip or invoice. The FA authorizes payment on both purchase cards.

The executive director does not have a purchase card in his name. However, the AA has written the account number for her purchase card in his planner so that he can occasionally order goods and services. He usually does not keep the credit card receipts for his purchases, but he does tell the AA what he purchased and instructs her on what expenditure coding to use. The AA then forwards the bill to the FA for payment.

The AA purchases most of the goods and services for the agency with her purchase card. She always keeps her purchase card with her in her purse. She also keeps receipts for all purchases that she has made in a folder in her desk drawer, verifies that the goods and services were received, and reconciles all receipts to her purchase card statement before sending to the FA for payment.

The FA has known the AA since high school. Since he has known her for so long, he trusts her and does not worry that she has submitted all receipts to her statement. He always authorizes her purchases and makes payment on her purchase card based on her word, especially since he knows that she keeps all documentation.

The FA also purchases goods and services with his purchase card. Most of the charges on his card are for recurring payments, like the lease of office space, agency phone bills, etc. Since these are all agency charges, he authorizes and makes payment on his purchase card.

The agency has written policies on purchase cards, but they aren$$t specific to the agency yet. They were obtained from a friend at another agency, and the AA is eventually going to make some modifications so that they are specific to the agency. Training is not formally provided since only two people in the agency are primarily using purchase cards. They tell each other when problems are encountered with the cards, so they feel that they are informed enough to use them.

Identify at least $5$ internal control violations in the case study above and your recommendations for more effective controls.