They use hidden cameras and store detectives to monitor customer activity, and they install sensor equipment at exits. The human element is an important factor in every system of internal control. A good system can become ineffective as a result of employee fatigue, carelessness, or indifference. For example, a receiving clerk may not bother to count goods received and may just "fudge" the counts. Occasionally, two or more individuals may work together to get around prescribed controls. Such collusion can significantly reduce the effectiveness of a system, eliminating the protection offered by segregation of duties. No system of internal control is perfect. The size of the business also may impose limitations on internal control . Small compa- nies often find it difficult to segregate duties or to provide for independent internal verifica tion. A study by the Association of Certified Fraud Examiners (2014 Report to the Nation on Occupational Fraud and Abuse) indicates that businesses with fewer than 100 employees are most at risk for employee theft. In fact, 29% of frauds occurred at companies with fewer than 100 employees. The median loss at small companies was $154,000, which was nearly as high as the median fraud at companies with more than 10,000 employees ($160,000). A $154,000 loss can threaten the ypsy existence of a small company. a15 DO IT! 1 Control Activities Identify which control activity is violated in each of the following situations, and explain how the situation creates an opportunity for a fraud. 1. The person with primary responsibility for reconciling the bank account and making all bank deposits is also the company's accountant. 2. Wellstone Company's treasurer received an award for distinguished service because he had not taken a vacation in 30 years. 3. In order to save money spent on order slips and to reduce time spent keeping track of order slips. a local bar/restaurant does not buy prenumbered order slips