The management of U is reviewing internal controls throughout the company.

The fact that the purchasing manager uses a very small number of suppliers is, in itself, a sign of poor internal controls.

It is acceptable for clerks in the trade receivables section to make journal adjustments without authorisation provided the amounts involved are not material to U's financial statements.

It is acceptable for clerks in the trade receivable section to make journal adjustments without authorisation, provided they have no access to cash receipts.

The fact that the purchasing manager does not keep documentation relating to negotiations with suppliers, or potential suppliers, is evidence that they are involved in fraudulent activity.

Clerks making journal adjustments without reference to their supervisor is evidence of inadequate separation of duties.

The way the role of purchasing manager is carried out in U increases the chance that the company will fall victim to fraudulent activity.