Your firm is the auditor of Alpha Pty Ltd (Alpha), an equipment hire company that has 80 branches nationwide, with its head office located in Melbourne. Each branch has a designated amount of stock for hire. The amount of stock for hire is calculated by the marketing department at head office, according to the local demand for products. Previously, branch managers had to obtain authority from the financial controller at head office to purchase replacement equipment from suppliers. Replacement equipment is issued due to either wear and tear or loss by the customer. In the case of a customer losing or destroying the equipment, the replacement value of the lost item is charged to the customer. Customers are allowed to buy on credit, but the credit limits are set by the credit controllers at head office. Standard terms of payment are 30 days from the date of the monthly statement. The company's new managing director, Sally Watkins, decided early in the financial year to decentralise decision making and give branch managers more authority. As a result, branch managers can now purchase replacement equipment and set credit limits for customers. Sally also introduced an incentive scheme for branch management, based on branch profits. Sally has set up a list of designated suppliers for equipment and has negotiated additional credit terms and/or special settlement discounts from them. A contract for the repair of equipment has been granted to an entity with links to the main shareholder in Alpha. You are planning the audit for the year ended 30 June 2020 and need to identify the risks of material misstatement. Your preliminary analysis showed the following: Branch sales and profits have increased significantly. Debtors' levels (days outstanding) have remained relatively constant. Creditors' levels (days outstanding) have increased marginally. Equipment stocks at branches have increased considerably. Repair-of-equipment costs have increased as a percentage of sales Equipment write-offs (due to wear and tear) have reduced relative to sales.

QSTN.-Outline five internal control activities that you would expect to see in place for Alpha.