Carlos Is the Vice President of Finance at PLP Corporation

Carlos is the vice president of finance at PLP Corporation.When he joined the company five years ago, the finance division was organized in two departments: operating transactions and non-operating transactions.Each department had two employees and a manager.The operating transactions department handled all aspects of transactions dealing with inventory, supplies, payroll and other operating expenses; the non-operating transactions department handled all aspects of transactions dealing with short-term investments, long-term debt and shareholders.Any transactions that did not fit one of the two groups were handled by the vice president of finance.The finance division had its own procedures manual, organized into three chapters: operating transactions, non-operating transactions, other transactions.Within the operating transactions department, one employee handled payroll only, while the other employee handled all aspects of non-payroll transactions.Within the non-operating transactions department, one employee handled transactions related to short-term investments.The other employee handled long-term debt transactions, while the department manager handled all aspects of transactions dealing with shareholders.Risk exposures for the finance division at PLP include:
a) Cash dividends being sent to the wrong shareholders
b) Dividend miscalculations
c) Embezzlement of cash
d) Missed payments on long-term debt
e) Payroll checks issued to employees no longer working for PLP
f) Payroll miscalculations
g) Poor choices for short-term investments
h) Purchasing supplies and inventory from unauthorized vendors
i) Theft of supplies
To address those risks, PLP might institute the following internal controls: adequate supervision, segregation of duties, appropriate use of information technology.Divide the risk exposures listed into three groups based on the internal control that would best address the risk; each group must have no fewer than two and no more than four risk exposures.Each risk exposure must be associated with exactly one internal control.