Yоu hаve been аssigned tо the аudit оf GreenLeaf Home Supplies Ltd., an audit client of your firm, L & M Chartered Professional Accountants. You are responsible for evaluating the internal controls in place over the acquisition and payment cycle in this year’s audit. The following is a description of the system based on your discussions with the client staff. GreenLeaf Home Supplies Ltd. is a wholesaler of eco-friendly household products, including biodegradable cleaning supplies, reusable kitchen items, and sustainable packaging materials. The company primarily supplies independent retailers and small grocery chains. GreenLeaf is based in Edmonton, Alberta, but operates an online ordering platform that allows customers across North America to place orders. Most of the products purchased for resale are sourced from international suppliers, particularly in Europe and Asia. To reduce shipping costs and take advantage of supplier discounts, GreenLeaf typically orders in large quantities. The company maintains a perpetual inventory system. Due to the steady demand for its products, GreenLeaf maintains substantial inventory levels, which are stored in a warehouse located next to the accounting office. The warehouse is managed by Samantha Wright (Warehouse Supervisor). Samantha oversees five warehouse employees responsible for both receiving and shipping inventory. Samantha is the only individual authorized to place purchase orders for GreenLeaf. She orders products directly through supplier websites. After placing each order, she prints a copy of the order confirmation and files it by supplier name in a filing cabinet in the warehouse. Goods are generally received within 8–12 days, accompanied by packing slips, and are accepted by warehouse staff. GreenLeaf purchases from approximately 45 suppliers, each offering specialized eco-friendly products. When Samantha identifies a new supplier, she completes a supplier setup form (including the supplier’s name, address, phone number, and contact person) and forwards it to the Accounts Payable Clerk, who enters the supplier into the accounting system. Samantha does not have access to the general ledger. Upon receipt of goods, warehouse staff retrieve the relevant order documents and compare the quantities received with those ordered. A receiving report is prepared summarizing the items and quantities received. If any goods are damaged or missing, the warehouse staff notify Samantha, who contacts the supplier. Discrepancies are noted on both the order documents and the receiving report, which reflects only items received in acceptable condition. The receiving report is then attached to the order documentation and submitted to Samantha. Samantha reviews the documentation, initials the receiving report to indicate approval, and forwards the paperwork to the Accounts Payable Clerk. Supplier invoices are received by mail or email, usually 1–2 weeks after delivery, and are opened by the Accounts Payable Clerk. The Clerk matches the invoice details to the receiving report and the original order, verifies the supplier in the system, and records the transaction (Dr. Inventory, Cr. Accounts Payable). If discrepancies were previously identified, the Clerk ensures the invoice reflects the corrected quantities. The Clerk then attaches the invoice to the supporting documents and processes the payment. Payments are issued every Thursday. Any payments exceeding $7,500 require approval from the Chief Financial Officer, while all other payments are processed electronically by the Accounts Payable Clerk. Inventory counts are conducted twice per year by Samantha and the warehouse staff. Any discrepancies must be approved by Samantha before adjustments are recorded in the system. In recent years, inventory discrepancies have increased from $6,900 in 2020 to $54,800 in 2025. Required: Identify one significant internal control weakness related to a lack of segregation of duties. Describe the weakness in detail and explain how an error could occur as a result of the weakness. Then, provide management with a recommendation for improvement. Only the first one will be marked. (4 marks) Recall the important ‘equation’ that we covered in the course that should be followed in order to ensure the accuracy of transactions recorded in the acquisition and payment cycle. List each component and use it to assess whether GreenLeaf Home Supplies Ltd.’s cycle is operating effectively. Be sure to link to case facts (generic responses will not be awarded any marks). (10 marks) Note: Do not click anywhere outside of the tables below. If you accidentally delete a table, you can try to undo it by holding down both the ‘Ctrl’ and ‘z’ keys. If that doesn’t work, you’ll need to continue on without the table in the blank space. No time extensions or grade allowances will be given for this. You may find it useful to use this 'full screen' icon while inputting your responses: