Several categories of control activity are identified in the chapter using the following categorisation:

A. Information processing controls:

1. General controls 2. Application controls:

(a) Proper authorisation

(b) Documents and records

(c) Independent checks B. Segregation of duties C. Physical controls D. Performance reviews Listed below are specific control procedures prescribed by Landry Company.
1. Material requisition forms are required to withdraw raw materials from the storeroom.
2. Cash registers are used for over-the-counter cash receipts.
3. Different individuals approve the payroll, write the payroll cheques and distribute the cheques.

4. Cheques are pre-numbered.

5. Credit is approved by the credit department prior to sale.
6. Inventory is stored in locked warehouses.

7. Shipping clerks verify agreement of goods received from the warehouse with a duplicate copy of the sales order before releasing the goods for shipment.
8. Perpetual inventory records are periodically adjusted based on physical inventory counts.

9. Off-site storage facilities are used for backup computer files and arrangements for backup facilities have been made in case of a disaster.

10.Management carefully reviews monthly operating reports showing variances from budgeted revenues and expenses, and follows up on unexpected variances.

Required

(a) Using the alphanumeric system assigned to categories of control activity at the start of this question, identify the category of control activity to which each of the above 10 controls applies.

(b) Distinguish between the following two expressions — ‘management authorisation’ and ‘employee approval’.