I only need help with question 2, please!!

Trouble in collections Once accounts are written off, the in-house collection efforts cease. The credit manager has a friend who runs a collection agency. He asked for and reccived pcrmission to place accounts with his friend's agency. The agency retains a 10% finder's fee for any collected accounts. In a recent meeting, the controller noted that very few of these accounts placed with the collection agency are being paid. The controller is considering placement with another agency. The credit manager tells the controller that t quite standard. After all, if they deemed they were uncollectible and wrote them off, why would they expect somcone else to be able to collect? The controller suspects something is amiss. The controller talks to friends who are also controllers and notes that often the collection rates from an outside agency are up to 25% of accounts placed in other words, 25% of the written off accounts when placed with an outside agency et paid. The credit manager's friend is reporting only a 5% collection rate. 1. From an internal control perspective, what do you think is bothering the controller? (Start with the 5 control activities. How are they covered now? 2. Currently, the collection agency does the collecting and remits 90% of the amount collected, retaining the 10%. Do you think there is a better way to handle this? Design a better system-using the narrative format (as in this problem). Include documents and any processing/IT controls you would add. This is your chance to be creative. In designing systems, there are only opportunities. I encourage you to use what