Two of your friends from high school will soon realize their lifetime dream of opening an English-style pub. They recently spoke with their accountant, who indicated that they should ensure that they implement some strong controls. They have no idea what the accountant was talking about. They know you are studying accounting and they have come to you for advice about what their accountant meant. 1 Why would the accountant tell your friends that they should implement some strong controls'? Ensure the reliability of financial reporting Eliminate the possibility of any theft or fraud Improve effectiveness of business operations Assist in the compliance with applicable laws and regulations o Improve efficiency of business operations Eliminate the possibility of litigation 2 The following is a list of control activities or things that create a strong control environment. 1. Hire competent ethical employees 2. Keep cash locked up 3. Have job descriptions 4. Ensure all cash receipts are deposited daily 5. Limit purchases to only authorized personnel 6. Ensure staff take vacations 7. Establish a code of conduct and follow it 8. Have a security system in place 9. Ensure applicable human resource policies are in place Which of the following correctly classify the items as a control activity or part of the control environment? O Control Activity: 1, 3, 7, 9; Control Environment: 2, 4, 5, 6, 8 O Control Activity: 1, 2, 5, 6, 8; Control Environment: 3, 4, 7, 9 Control Activity: 2, 4, 5, 7, 8, 9; Control Environment: 1, 3, 6 O Control Activity: 2, 4, 5, 6, 8; Control Environment: 1, 3, 7, 9 Control Activity: 1, 2, 3, 4, 5; Control Environment: 6, 7, 8, 9 O Control Activity: 2, 4, 5, 7, 9; Control Environment: 1, 3, 6, 8