The following are partial descriptions of internal controls for companies engaged in the manufacturing business:
1. When Mr. Clark orders materials, he sends a duplicate purchase order to the receiving department. During the delivery of materials, Mr. 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.
2. Every day, hundreds of employees clock in using time cards at Generous Motors Corporation. The timekeepers collect these cards once a week and deliver them to the computer department, which handles data entry. There, the data on these time cards are entered into the computer. The entered data is used in the preparation of the labor cost distribution records, the payroll journal, and the payroll checks. The treasurer, Mrs. Webber, compares the payroll journal with the payroll checks, signs the checks, and returns them to Mr. Strode, the supervisor of the computer department. The payroll checks are distributed to the employees by Mr. Strode.
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 Mary Cooper or by the treasurer, John Winters. Cooper receives the cancelled checks and bank statements. She reconciles the branch account herself and files cancelled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office.

Required
a. List the deficiencies in internal control for each of these situations. To identify the deficiencies, use the methodology that was discussed in this chapter.
b. For each deficiency, state the type(s) of misstatement(s) that is (are) likely to result. Be as specific as possible.
c. How would you improve internal controls for each of the three companies?*