Evaluating Internal Controls
Evaluate the scenarios internal controls and reveal their weaknesses
Dora I. Gonzalez
Devry University
Abstract
Why Internal Controls? An efficient internal control system aids the company to achieve its mission and accomplish set objectives and goals. An effective internal control systems helps promote orderly, economical and efficient operations, along with producing quality products and services consistent with the company?s mission. Safeguard resources against loss due to waste, abuse, mismanagements, errors and fraud. Promote adherence to statues, regulations, bulletins and procedures. And lastly, develop and maintain reliable finance and management data and accurate data reporting in a timely manner. …show more content…
Identifiable missing control characteristic is key controls performed by management in order to overcome the lack of segregation of duties. An employee with access to inventory (asset) should not have the ability to enter into the general ledger or count the receipts. The lack of supervision also increases the chance that a transaction would not be authorized.
Identifiable possible problem is the size of the company. Company may be too small or this may be a remote location with few employees, therefore, one person is performing many duties.
Proposed solution to the problem is to have different employees count the shipments and the inventory and have the supervisor spot check the clerk?s work. Do an inventory ?roll forward? to ensure that all purchases and sales predict the ending inventory amounts counted at the end of the …show more content…
The policy itself encourages abuse by making everyone know that these things will not be checked and that they can pay prices that lead to the best ?perks? for them as a result of their purchase. The policy reflects a terrible ?tone at the top.? That is, the policy signals that when you are busy, a few shortcuts are not important to us. Do whatever you need to make it work. Proposed solution to the problem is to re-write the policy as it should be clear that original receipts and timely submission is expected. Employees should use their procurement card so that the best prices and points accrue to the firm. If the staffing levels are not adequate, this needs to be fix. Scenario C- Michael Jordon is a new employee hired from Craig?s List recommended by a co-worker. Mike was hired as a Human Resource Assistant. Mike?s first day on the job he is told that he should follow his own judgments when deciding how employee issues such as hiring and firing of employees, sexual harassment, and ethical infractions should be
Dora I. Gonzalez
Devry University
Abstract
Why Internal Controls? An efficient internal control system aids the company to achieve its mission and accomplish set objectives and goals. An effective internal control systems helps promote orderly, economical and efficient operations, along with producing quality products and services consistent with the company?s mission. Safeguard resources against loss due to waste, abuse, mismanagements, errors and fraud. Promote adherence to statues, regulations, bulletins and procedures. And lastly, develop and maintain reliable finance and management data and accurate data reporting in a timely manner. …show more content…
Identifiable missing control characteristic is key controls performed by management in order to overcome the lack of segregation of duties. An employee with access to inventory (asset) should not have the ability to enter into the general ledger or count the receipts. The lack of supervision also increases the chance that a transaction would not be authorized.
Identifiable possible problem is the size of the company. Company may be too small or this may be a remote location with few employees, therefore, one person is performing many duties.
Proposed solution to the problem is to have different employees count the shipments and the inventory and have the supervisor spot check the clerk?s work. Do an inventory ?roll forward? to ensure that all purchases and sales predict the ending inventory amounts counted at the end of the …show more content…
The policy itself encourages abuse by making everyone know that these things will not be checked and that they can pay prices that lead to the best ?perks? for them as a result of their purchase. The policy reflects a terrible ?tone at the top.? That is, the policy signals that when you are busy, a few shortcuts are not important to us. Do whatever you need to make it work. Proposed solution to the problem is to re-write the policy as it should be clear that original receipts and timely submission is expected. Employees should use their procurement card so that the best prices and points accrue to the firm. If the staffing levels are not adequate, this needs to be fix. Scenario C- Michael Jordon is a new employee hired from Craig?s List recommended by a co-worker. Mike was hired as a Human Resource Assistant. Mike?s first day on the job he is told that he should follow his own judgments when deciding how employee issues such as hiring and firing of employees, sexual harassment, and ethical infractions should be