Success Commercial School (SCS) is the brain-child of Xavier and Yvonne, two retired school principals. With part of their saving, they decided to establish SCS which started operation in January 2020. Initial plan was to enrol students for a one-year diploma program with provision for them to move on to another one-year advance diploma program next year. There was a shortage of similar schools in the town and high demand for such programs. The Ministry of Education (MOE) approved the diploma programs and agreed to provide some financial assistance to SCS next year. With their academic experience for more than 25 years each, Xavier and Yvonne were confident of making SCS a commercial success. As the only two directors of the school, Xavier and Yvonne assumed full responsibility for all academic matters. Administration and accounting functions were assigned to the full-time staff with fixed monthly salary. SCS engaged only part-time lecturers to conduct the program. administrative works were performed by a manager (Alice) and three assistants (Belinda, Charlotte and Daisy). Both part-time and full-time staff were offered an incentive bonus next year if the revenue exceeded a certain amount in 2020. The entire diploma program was meant to be completed in two terms (commencing in January and June). Students would take the final examination in November with the results being announced just before the year-end holidays. Each student would pay a fixed amount of $4,500 for the entire program payable half in January and half in June. Belinda, Charlotte and Daisy (but not Alice) were authorised to collect school fees from the students who usually preferred to pay in cash. A simple excel spreadsheet was maintained to account for school fees for each student. The amount and date of receipt were entered in the spreadsheet by whoever received the funds. No formal receipt was issued to any student. If anyone wanted it, the payment was acknowledged in writing on SCS letterhead. At the end of each day, Belinda, Charlotte and Daisy handed over the day's cash collection to Alice for safe-keeping in her locked office drawer. Once a week, when she had time, Alice deposited the funds in to SCS bank account. Bank deposit slips were available for audit purposes. 282 students were enrolled for the diploma program. To ensure proper collection of school fees, students were informed that the final results would be withheld if fees were not paid in full. As per the excel spreadsheet, all students paid their fees before the year-end. All payments, including lecturers' fees were approved and handled by Alice. Usually, she used daily cash collection from Belinda, Charlotte and Daisy for this purpose but if there was a shortage in any week, she drew cash from the bank. Beside Xavier and Yvonne, Alice was the only bank signatory who was also responsible for preparation of monthly bank reconciliation statements. It is June 2021 now and Alice has prepared the financial statements of SCS for the year ended December 2020. Before releasing financial assistance, MOE needed these statements to be audited by professional auditors. Check and Trace, Chartered Accountants have been engaged to conduct the audit. You are the audit manager in charge of the audit. The audit has been conducted over a period of two weeks and is in the process of finalisation. All reconciliations have been completed and the usual bank confirmation has been obtained. There is no special observation that needed your attention. However, as a part of her routine analytical procedure, your audit supervisor Sally has a concern. As per Sally's analysis, the school fees (main revenue item) should be $1,269K (282X$4,500) but the Income Statement shows an amount of $1,185K being the actual amount deposited into bank during the year. She had discussed this with Alice who did not show much concern. As per Alice, individual students' records in the excel spreadsheet correctly reflected the dates and amounts of school fees collected. Moreover, she personally had deposited all cash collections in to the bank. Written confirmation from the bank also agreed with the bank balance as per school records. Therefore, nothing was wrong. Required: (i) Describe, and briefly explain the consequences of, any five (5) weaknesses in the internal controls regarding collection, recording and bank deposit of school fees. (20 marks) Note: Present your answer in the following tabular format: Weakness Description Consequences 1 2 3 4 5 (ii) State any five (5) specific action items that you would expect the client to take to determine the root cause of the discrepancy of $84K. (You may assume there is no rush to issue the audit report.)