exhibit 3 Strengths and Weaknesses of EC/SSs Control Environment Control Environment Component Factors that Strengthen Factors that

Weaken 1. Integrity and Ethical Values Owners (Phil and Doug) are highly involved in running the business and they appear to be people of integrity The company has experienced strong growth primarily through word-of-mouth advertising which indicates the company (owners) operates ethically and delivers a valuable service High employee turnover Sales people are paid on commission and can negotiate special pricing 2. Commitment to Competence Employees seem to receive sufficient training and appear to understand their responsibility Office staff are largely made up of college accounting students. Thus while the staff has little prior work experience they can apply concepts from their business education to EC/SSs processes Most employees have little or no previous experience No formal job descriptions have been developed Office staff experience confusion regarding their job duties 3. BOD or Audit Committee Participation There is an active BOD Board members are knowledgeable about the business and the industry BOD have the flexibility to meet when needed The BOD meetings are scheduled only once per year There are no board members independent of management 4. Managements Philosophy and Operating Style Phil and Doug maintain an open door policy Employees are encouraged to express their concerns to management Doug and Phil are the only people authorized to sign checks EC/SS is a focused, well-run organization The engagement of CPAs for a financial statement audit signals managements (1) desire to produce fair financial statements, (2) interest in controls, (3) desire to monitor business risks, and (4) desire to continuously improve Phil and Doug have little understanding of accounting and finance issues Office manager paid a % of sales Management does not formally specify goals No budgets are prepared Management appears to emphasize efficiency and output over controls Office employees indicate there are problems in processing trade receivables (management does not seem to share the concern) No separate physical controls over important documents or computer equipment 5. Organizational Structure Owners and office manager are highly involved in day-to-day operations Responsibilities and authorities of owners and office manager are clearly established Office manager directly

supervises data processing Operating policies and procedures are determined by owners and office manager Sales people are paid on commission and can negotiate special pricing Office manager is paid a percent of total sales 6. Assignment of Authority and Responsibility Owners are highly involved in day-to-day operations Office manager approves all sales Exception reports are generated for specially priced sales Computer system and sales process is re-evaluated every eight weeks Computer system was developed by office manager No user manual or other system documentation exists for computer system Office manager makes relatively frequent changes to the system Office employees experience confusion regarding their job duties and responsibilities 7. Human Resource Policies and Practices New hires receive immediate training New employees in operations are assigned to work with more experienced employees Owners and office manager are highly involved in day-to-day operations New hires have little or no prior experience Employee turnover is high Workloads can get heavy Office employees have to help cover other positions when workload is busy Office employees experience confusion regarding their job duties and responsibilities

Biaya dalam jutaan

2,4 2,2 2,0 1,8 1,6 1,4 1,2 4 8 10 24 20 61 Penjualan dalam unit 14 18 28 BEP

Target Penjualan

Total Biaya

Biaya Tetap

30

34