QUESTION ONE [18 MARKS] Internal control consists of five main components. These five components are integrated with management processes and are derived from the way management runs the organisation. INFORMATION SolarTech Ltd is a company that researches and manufactures solar energy products including solar panels and inverters. The following actions, policies, and procedures form part of SolarTech Ltd's system of internal control: 1.1 SolarTech requires each of its employees to sign an ethical code of conduct every year, the conditions of which are set by the directors. The conditions and consequences of breaching the code are explained to employees at a seminar attended by the chairman and the board. Any alleged code violations are investigated by a committee of the board. 1.2 SolarTech Ltd does not allow research staff to remove laptops or other portable data storage devices from the laboratory. This is enforced by monitored electronic and X-Ray scanners located at the laboratory entrance. 1.3 SolarTech Ltd employs a research cost accountant who records the on-going cost and details of different research projects. He makes use of specialized software to do this. 1.4 The financial director of SolarTech Ltd meets with the research director quarterly to compare actual and budgeted costs and follow up on any unexpected variances. 1.5 The financial director and the sales director meet to assess the accounts receivable on a monthly basis. SolarTech Ltd's terms to debtors are 30 days and debts over 120 days are considered to be bad debts and will usually be written off with the approval of the financial director. Both directors sign the necessary journal entry and supporting documentation at the conclusion of the meeting. 1.6 Every two months, the SolarTech Ltd board committee meets to discuss the industry's regulatory environment, potential market developments and solar energy trends. 1.7 The SolarTech Ltd marketing department has set up a customer phone-in service which enables customers to phone in with complaints relating to the product quality, pricing, availability etc. Phone calls are recorded and analysed. 1.8 The warehouse manager has read-only access to the inventory master file and pickers have no access to the inventory master file. (2) REQUIRED: Identify the component(s) of the system of internal control to which each of the above points relates. Give reasons for your choice. If you have chosen control activity, state which type(s) of control is (are) being implemented, for example segregation of duties