The purpose of Part III is to obtain an understanding of internal control and assess control risk for Pinnacle Manufacturings acquisition and cash disbursement transactions. Required a. Familiarize yourself with the internal control system for acquisitions and cash disbursements by studying the information in Figure 10-12 and Figure 10-13. b. Prepare a control risk matrix for acquisitions and a separate one for cash disbursements using Figure 10-5 on page 309 as a guide. A formatted control risk matrix is provided on the textbook Web site. The objectives should be specific transaction-related audit objectives for acquisitions for the first matrix and cash disbursements for the second matrix. See pages 608612 in Chapter 18 for transaction-related audit objectives for acquisitions and cash disbursements. In doing Part III, the following steps are recommended: (1) Controls a. Identify key controls for acquisitions and for cash disbursements. After you decide on the key controls, include each control in one of the two matrices. b. Include a C in the matrix in each column for the objective(s) to which each control applies. Several of the controls should satisfy multiple objectives. (2) Deficiencies a. Identify key deficiencies for acquisitions and for cash disbursements. After you decide on the deficiencies, include each significant deficiency or material weakness in the bottom portion of one of the two matrices. b. Include a D in the matrix in each column for the objective(s) to which each significant deficiency or material weakness applies. (3) Assess control risk as high, medium, or low for each objective using your best judgment. Do this for both the acquisitions and cash disbursements matrices.