Requirement b$.$ For each deficiency, state the type$($s$)$ of misstatement$($s$)$ that is $($are$)$ likely to result. Be as specific as possible. $($Use each possible misstatement only once.$)$

View the possible misstatement.

$\backslash$table$[[$Partial descriptions of internal controls,Possible misstatement$($s$)],[1.$ Every day, hundreds of employees clock in using their employee identification cards at Generous Motors Corporation. The data on these time records is used in the preparation of the labor cost distribution records, the payroll journal, and the electronic payments and payroll checks. The treasurer, Angela Lee, compares the payroll journal with the payroll records, signs the checks, and returns the payroll notifications and checks to Charles Strode, the supervisor of the computer department. The payroll checks and payment notices are distributed to the employees by Strode.,$],[2.$ When Leah Goldmann orders materials, an electronic copy of the purchase order is sent to the receiving department. During the delivery of materials, David Smith, the receiving clerk, records the receipt of shipment on this purchase order and then sends the purchase order to the accounting department, where it is used to record materials purchased and accounts payable. The materials are transported to the storage area by forklifts. The additional purchased quantities are recorded on storage records.,$],[3.$ The smallest branch of Connor Cosmetics employs Mary Cooper, the branch manager, and her sales assistant, Janet Hendrix. The branch uses a bank account to pay expenses. The account is kept in the name of "Connor Cosmetics$-$Special Account." To pay expenses, checks must be signed by Cooper or by the treasurer, Lahn Pham. Cooper receives the canceled checks and bank statements. She reconciles the branch account herself and files canceled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office.,E$]]$A$.$ Padding of payroll with fictitious names and extracting the checks made out to such names when they are returned after they have been signed.

B$.$ The deficiency increases the likelihood of obsolete inventory and the possibility of theft of shipments larger than the amount ordered. It also increases the likelihood of inaccurate counts of inventory actually received and recorded.

C$.$ The failure to isolate responsibility for shortages also increases the likelihood of obsolescence in that employees are likely to be less concerned when they are not held accountable. Because the company cannot isolate responsibility, it might also encourage receiving or stores to take goods.

D$.$ There may be misstatements in hours, rates, extensions, and the existence of nonworking employees.

E$.$ The manager may draw checks to herself or others for personal purposes and omit them from her list of cash disbursements or inflate other reported disbursement amounts.