The internal audit function of ABC Company Limited has identified the following conditions in the company's internal control system:

a) There are occasional discrepancies between physical inventory counts and perpetual inventory records.

b) There are many customer refunds and credits.

c) Many original documents are missing or lost. However, there are substitute copies of all missing originals.

d) Fixed asset disposals are sold at favourable prices to some employees or outsiders.

Required:

1) Describe and evaluate the possible causes of each condition.

2) Discuss and explain the recommended controls to be implemented that would correct each of the conditions.

3) Classify each of your recommended controls in accordance with the COSO framework (authorization, segregation of duties, supervision, and so on).