Question:You're the senior auditor on a new client.The client is a moderate-sized merchandising company.As part of your review of the client's system of internal controls you note that:

1.Cash receipts are not always deposited on a timely basis.(You noted several examples where cash was deposited 4 days after receipt.)

2.Inventory is not counted periodically.

3.No one reviews the account distributions in the purchases journal when the accounting manager takes his two-week vacation each year.

Which of the above would most likely be considered a material weakness?

Explain your answer.(HINT:Think about what could go wrong and then ask yourself the following:

a) is it reasonably possible that an error could occur?

b) could the error could be material?

If it helps, you can assume materiality is set at 5% of net income.