The following control activities exist at ABC Company.

1. The board of directors must have at least four members who are not currently serving in any other role in the company.

2. At the end of the year, the controller reviews all monthly bank reconciliations for the year and documents corrective actions for any exceptions noted.

3. All procedures and policies related to hiring and promotion are documented and reviewed by management semi-annually. Follow up procedures after the review are documented.

4. All employees have their own unique passwords which must be entered to access the POS system.

5. Managers perform semi-annual evaluations of internal controls over financial reporting, operations, and compliance. Activities to fix the problems identified during semi-annual control evaluations are continuously reviewed by management.

6. Sales prices used by the POS system are based on the approved price list

7. Salary and bonus for management executives are determined by the compensation committee of the board of directors.

8. Every employee must certify their compliance with the Code of Ethics every year.

9. At the end of the quarter the CEO and the CFO report to the board of directors about the financial performance of the company.

10. All new hires for entry-level positions must have a college degree. All new hires for above entry-level position must have a college degree and at least three years of relevant work experience.

11. Credit sales exceeding the customers credit limit are flagged by the IT system and are reviewed by the senior manager at the end of each day; such sales without the appropriate approval are investigated.

12. All audit committee members must have experience in financial reporting.

Required:

1) Assign the internal controls 1-12 (if they apply) listed above to one of the two principles in the table below. List only the number of the internal control that corresponds to the related principle in the second column.

2) After assigning the internal controls to each of the principles (i.e., mapping), determine whether there are any missing or inadequate internal controls (i.e., gaps). Describe this in the third column.