Paula, fred, and stephanie agree that paula and fred will form and conduct a partnership business and that stephanie will become a partner in two years. stephanie agrees to lend the firm $50,000 and take 10 percent of the profits in lieu of interest. without stephanie’s knowledge, paula and fred tell harold that stephanie is a partner, and harold, relying on stephanie’s sound financial status, gives the firm credit. the firm later becomes insolvent, and harold seeks to hold stephanie liable as a partner. should harold succeed? explain.

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?