required are number 4 5 and 6.

4. The 12 cardinal rules of internal control formulated by Holmes and Overmyer are listed below. Why do you think are they describe as "cardinal"? Classify them also into: A. Accounting controls B. Administrative controls C. Both (1) Hire good employees and give them training. (2) Positions of trust like that of the cashier and treasurer should be bonded. (3) Positions without bonds will be checked through job rotations and/or forced vacation leaves. (4) Duties and responsibilities should be put down in writing. (5) Duties should be fixed in order to fix responsibility. (6) Actual work/operations should be separated from the recording/accounting. (7) Related functions should be separated because they are incompatible. (8) Mechanical devices should be utilized (calculators, cash registers, etc.) (9) The double-entry system should be used instead of the single-entry system. (10) Controlling accounts and subsidiary ledgers should be used. (11) All other available proofs of accuracy should also be utilized. (12) Adequate insurance coverage on fire, liability, and other losses shall be purchased. 5. Looking at the rules in no. 4, how much budget do you think is needed if a company will install a system with all the 12 rules in mind? Relate the required budget to the so- called cost-benefit analysis. Relate also the cost-benefit analysis to the so-called concept of reasonable assurance. 6. Describe briefly the following tools auditors use in trying to "understand" the client's system of internal control- IC questionnaire, IC checklist, flowchart, and observation/memorandum