The management at Livingston, Inc., recognizes that a well-designed internal control system provides many benefits. Among the benefits are reliable financial records that facilitate decision making and a greater probability of preventing or detecting errors and fraud. Livingston's internal auditing department periodically reviews the company's accounting records to determine the effectiveness of internal controls. In its latest review, the internal audit staff found the following eight conditions: 1. Daily bank deposits do not always correspond with cash receipts. 2. Alterations have been made to physical inventory counts and to perpetual inventory records. 3. There are many customer refunds and credits. 4. Many original documents are missing or lost. However, there are substitute copies of all missing originals. 5. A decrease in the gross profit percentage was satisfactorily explained. 6. Many documents are not approved. 7. Bad debt write-offs are not prepared and approved by the same employee. Required 8. There are no discrepancies between physical inventory counts and perpetual inventory records. 1. For each of the eight conditions detected by the Covington internal audit staff: a. Describe a possible cause of the condition. If the control is satisfactory, indicate as such. b. Recommend actions to be taken and/or controls to be implemented that would correct the condition for control that are deemed not satisfactory.