Internal Control and Risk Evaluation
Internal Control and Risk Evaluation
Internal controls are the key to running a successful business. Kudler Fine Foods, after reviewing flowcharts created by Accounting Team A, is requesting information regarding controls for system improvements. Presented here is an analysis of their current accounting information system, risks and controls associated with this system and an evaluation of applying internal controls to help mitigate risks and losses.
Risk Analysis
Assessing risk is a difficult task. In its simplest term risk is the chance of negative outcomes (Hunton, Bryant, & Bagranoff, 2004). There are many types of risk that all business must consider; Kudler Foods is susceptible to at least two. First, business risk, the likelihood that an organization will not achieve its business goals and objectives (Hunton, Bryant, & Bagranoff, 2004). The most evident business risk that Kudler faces is from new competition. They are currently in a market where few businesses exist that provide their services, however their expansion plans could see more store popping up in these areas. Economic conditions can also interfere with Kudler’s expansion plans.
A second form of risk is IT risk. IT risk includes risks associated with data access and integrity. Unauthorized access to data can be physical, actually viewing confidential information, or logical, an employee who has physical access but abuses that access by looking up information not needed to perform his or her job (Hunton, Bryant, & Bagranoff, 2004). Kudler runs the risk of hackers stealing customer or employee data, or employees manipulating time or inventory records.
Risks and Internal Controls
Managers need to assess risk and decide how to apply resources to manage it (Hunton, Bryant, & Bagranoff, 2004). Input controls, used by companies in an attempt to ensure validity, accuracy, and completeness of the date entered into an AIS (Bagranoff, Simkin, & Strand Norman, 2008), are needed for
Internal controls are the key to running a successful business. Kudler Fine Foods, after reviewing flowcharts created by Accounting Team A, is requesting information regarding controls for system improvements. Presented here is an analysis of their current accounting information system, risks and controls associated with this system and an evaluation of applying internal controls to help mitigate risks and losses.
Risk Analysis
Assessing risk is a difficult task. In its simplest term risk is the chance of negative outcomes (Hunton, Bryant, & Bagranoff, 2004). There are many types of risk that all business must consider; Kudler Foods is susceptible to at least two. First, business risk, the likelihood that an organization will not achieve its business goals and objectives (Hunton, Bryant, & Bagranoff, 2004). The most evident business risk that Kudler faces is from new competition. They are currently in a market where few businesses exist that provide their services, however their expansion plans could see more store popping up in these areas. Economic conditions can also interfere with Kudler’s expansion plans.
A second form of risk is IT risk. IT risk includes risks associated with data access and integrity. Unauthorized access to data can be physical, actually viewing confidential information, or logical, an employee who has physical access but abuses that access by looking up information not needed to perform his or her job (Hunton, Bryant, & Bagranoff, 2004). Kudler runs the risk of hackers stealing customer or employee data, or employees manipulating time or inventory records.
Risks and Internal Controls
Managers need to assess risk and decide how to apply resources to manage it (Hunton, Bryant, & Bagranoff, 2004). Input controls, used by companies in an attempt to ensure validity, accuracy, and completeness of the date entered into an AIS (Bagranoff, Simkin, & Strand Norman, 2008), are needed for
References: Bagranoff, N. A., Simkin, M. G., & Strand Norman, C. (2008). «Core Concepts of Accounting Information Systems» (10th ed.). New York, NY: Wiley & Sons. Hunton, J. E., Bryant, S. M., & Bagranoff, N. A. (2004). Core Concepts of Information Technology Auditing. Hoboken, NJ: Wiley & Sons.