The West End Boutiques company was founded by Libbie Williams in 1990 with a single store in College Station, Texas, and the company now has 21 shops located in the triangle of Dallas, San Antonio, and Austin, Texas. Libbie was an accounting major in college, passed her CPA in her first attempt, and worked for an (at the time) Big 5 accounting firm for 11 years prior to opening her first store. She recently selected a state-of-the-art accounting system that connects all of her stores financial transactions and reports. Libbie employs two internal auditors who monitor internal controls and also search for ways to improve the companys operational effectiveness. As part of the monitoring process, the internal auditors take turns conducting periodic reviews of the accounting records. For instance, the company takes a physical inventory count at all stores once each year and an internal auditor oversees the process. The most senior internal auditor just completed a review of the accounting records and discovered items of concern. These were: - Physical inventory counts varied from inventory book amounts by more than 6% at two of the stores. In both cases, physical inventory was lower. - Two of the stores appear to have an unusually high amount of sales returns for cash. - In nine of the stores, gross profit has dropped significantly from the same time last year. - At four of the stores, bank deposit slips did not match cash receipts. - One of the stores had an unusual number of bounced checks. It appeared that the same employee was responsible for approving each of the bounced checks. - In seven of the stores, the amount of petty cash on hand did not correspond to the amount in the petty cash account.

a) For each of the below concerns, identify a risk that may have resulted in the concern.

b) For each of the below concerns, recommend internal control(s) to prevent, detect, and/or correct the problem in the future, and identify the type of each control (preventive, detective, and/or corrective). You should recommend at least a few per concern if possible.

c) To the extent you did not discuss it in the answers to the previous requirements, identify which of the COSO IC and/or COSO ERM components this company could improve upon following and discuss in detail how it could apply them.