The following two questions are based on the following case. McPeters Case Description

Week 10 Homework QuestionsThe following two questions are based on the following case.McPeters Case DescriptionMcPeters is a regional chain of fast food restaurants operating on the West Coast of the UnitedStates. McPeters is publicly owned and its stock is traded on the American Stock Exchange. ABoard of Directors, who has appointed a Chief Executive Officer to handle the day-to-daymanagement of the chain, runs McPeters. McPeters offers New Mexican cuisine in a fast foodstyle. Their menu includes tacos, burritos, tostados, enchiladas, fajitas, and salads with a varietyof fillings, most of which include green chilies. All restaurants are company owned andoperated. Each has a manager who is responsible for the daily operations of the restaurantincluding hiring and scheduling staff, purchasing food and supplies, and running localpromotions.McPeters restaurant #33, located in Lodi California, recently opened and its new manager, UweGonzales, is concerned about competing with established Mexican restaurants and fast foodoutlets in the area. Lodi is an agricultural community in the middle of the great Central Valley ofCalifornia and many of its residents are Hispanic. Uwe feels that his customers will be verysensitive to the quality of the ingredients he uses and wants to monitor his food vendors closely.He has established the following purchasing procedures to control interactions with foodvendors.Each night, the assistant manager responsible for closing the restaurant takes an inventory offood and supplies on hand and writes up a purchase order to replenish the inventory for theseitems. (S)he consolidates all items that are ordered from an individual vendor into one order sothat there are only one order per vendor. Uwe, who opens up in the morning, reviews thepurchase orders and contacts the restaurant’s primary vendors to place the orders. Beforeplacing the orders, he double checks the vendors’ files to make sure that there have been noproblems with the vendors’ delivery speed or product quality. Uwe has established electronicordering arrangements with all his vendors and so all he has to do is either e-mail the order to thevendor or use the vendor’s website, if the vendor maintains one. An electronic copy of all ordersis stored in the restaurant’s database when they are placed.When shipments arrive, Uwe or the assistant manager on duty receives the shipment bychecking in the food and supplies and comparing the items shipped to the order informationstored in the restaurant’s database system. For control purposes, Uwe insists that only oneperson, either himself or one of the assistant managers, check in merchandise. The person whochecks in the shipment updates the restaurant’s database by recording the amount and date of theitems received and checking off items from an outstanding order list. Uwe does not allowshipments to be received if they were not ordered. They are not even removed from the vendor’sor shipper’s truck.Any problems with a vendor’s shipments (e.g., late shipments or incomplete shipments, defectiveitems) are logged in the database. Since the restaurant cannot control how the vendors structure1their shipments, shipments can be incomplete because the vendor does not have sufficientquantities on hand to fill the order. In addition, the vendor can combine more than one order intoone shipment.Because of the perishable nature of food products, Uwe does not allow backorders. If a vendorships an incomplete order, that portion of the order is cancelled and the missing items arereordered.When invoices arrive from the vendors, the restaurant’s bookkeeper compares the informationon the invoice to the order and receiving information in the restaurant’s database; writes a checkfor payment but does not sign it; and includes the vendor’ invoice with the check, which sheforwards to Uwe for payment. Since Uwe cannot control vendors’ billing practices, invoices maycover parts of shipments or more than one shipment. To make the payment, Uwe must sign allchecks and he usually double checks, on a sample basis, the bookkeepers’ work before signingand mailing the checks. Uwe mails the checks to the vendors.Questions1)For each of the following activities in a typical acquisition cycle, describe in your ownwords the goal of the activities, the typical processes involved, and the documentsinvolved. This part of the question is general and not specific to McPeters. By "in yourown words" I mean you cannot directly quote the text or any outside source here even ifyou cite them properly. Copying with citation won’t violate academic integrity, but itdoesn’t follow the instructions and will lead to are reduction in your grade. Copyingwithout citation obviously is plagiarism. Once you have described the goal, processes, anddocuments, find an example from the McPeters case of how they handle and documentthese activities. Some of McPeters’ activities may use different names for documents ordifferent ways of documenting things, but try to identify how they serve the same purpose.Answer the question by filling in the following table.2ActivityRequest goods orservicesPlace an orderReceive goods orservicesRequest paymentMake paymentGoalProcesses and Documents3McPeters’ Example1)Given the description of how McPeters’ restaurant #3 orders merchandise, receivesshipments, process invoices, and makes payments, identify three potential financial risks toMcPeters associated with that event and suggest one control procedure that might mitigateeach risk. I am not looking for operating risks like losing a customer, but risks that affectthe accuracy of the financial statements or loss of assets. Classify your risks ascompleteness, occurrence, and/or accuracy. I want you to ignore other audit objectives forthis question.The control should be new to McPeters and not already be mentioned in the case.Consider all activity from the point that the associate manager takes an inventory andprepares an order until Uwe mails the check. Explain how each control will support theaudit objective it is designed to support and discuss a potential weakness in the control.Your explanation and identification of potential weakness should provide sufficient detailso that I can tell you understand how the control works. For example, "segregation ofduties" is not an acceptable explanation. You need to tell me why segregating specificduties would help support the audit objective you identified. Your answer should includethree distinct risks and three distinct controls even if one control would mitigate both risks.Finally, no control is 100% effective. Thus, I want you to identify a weakness in thecontrol you are suggesting they implement. Answer the question by filling in the followingtable.4RiskControlsExplanation5Potential Weakness2)For each of the following balance audit objectives, suggest a substantive procedure thatcould test the fixed asset account balance and explain how your test would provide supportfor the objective. Please state your answer in your own words and do not copy verbatimfor any outside source or the text.a)Existence -b)Rights and obligations -c)Completeness -d)Accuracy -6