Question $4[21$ marks$]$

XYZ Ltd$.$ is a growing manufacturing company that recently expanded its operations to include an online store. The company$$s finance department is responsible for processing all orders, managing inventory, and preparing financial statements. XYZ Ltd$.$ has experienced significant growth in the last year, and the volume of orders has increased substantially. However, the company has not yet updated its internal control system to address these changes. There have been some instances where sales orders were processed without proper documentation, and inventory discrepancies were found during physical counts. The leadership at XYZ Ltd$.$ is committed to profitability and business expansion, but they have not emphasized the importance of internal controls or established clear policies on ethical behavior. Senior management's focus is primarily on growth and revenue generation

Required:

$4\mathrm{.}1$ Identify the internal control weaknesses in the above sales process and a suggested solution to mitigate the weakness identified $[2$ marks$]$

$4\mathrm{.}2$ What are the components of internal controls. Explain using an example for each$[16$ marks$]$

$4\mathrm{.}3$ What is the key weakness in the "Control Environment" at XYZ Ltd$.?(1$ mark$)$

$4\mathrm{.}4$ How should XYZ Ltd$.$ address its "Risk Assessment" deficiencies? $(1$ mark$)$

$4\mathrm{.}5$ What improvements could XYZ Ltd$.$ make to its "Information System"? $(1$ mark$)$