Internal Control and Sunshine Center
Task 3: Internal control
1. What do you think is the primary problem at the Sunshine Center?
There where no financial reports or summaries of the cash flows. Probably, Barb wasn’t fare about the payments. Because there was no financial report it was not clear where all the money went to.
2. Why is accountability important to the Sunshine Center Committee? The director? Cli ents of the Sunshine Center? Church members? It is so important to the committee so they can check if the cash balance is still okay. The director can check if everybody does his work well and if there are no financial problems. The clients need to know if Sunshine is fair and the church members are maybe willing to serve the committee if they know it is fair.
3. The Committee of Sponsoring Organizations of the Treadway Commission COSO in- ternal control framework COSO 1992 is an excellent tool for understanding and imple- menting internal control. How is internal control defined in the COSO framework? Internal control is broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: ● Effectiveness and efficiency of operations. ● Reliability of financial reporting. ● Compliance with applicable laws and regulations 4. Internal control may need to be applied selectively in a small organization. What are the components of the COSO framework, and what components do you think should be used at the Sunshine Center?
Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated with the management process. Although the components apply to all entities, small and mid-size companies may implement them differently than large ones. Its controls may be less formal and less structured, yet a small company can still have effective internal control.
1. What do you think is the primary problem at the Sunshine Center?
There where no financial reports or summaries of the cash flows. Probably, Barb wasn’t fare about the payments. Because there was no financial report it was not clear where all the money went to.
2. Why is accountability important to the Sunshine Center Committee? The director? Cli ents of the Sunshine Center? Church members? It is so important to the committee so they can check if the cash balance is still okay. The director can check if everybody does his work well and if there are no financial problems. The clients need to know if Sunshine is fair and the church members are maybe willing to serve the committee if they know it is fair.
3. The Committee of Sponsoring Organizations of the Treadway Commission COSO in- ternal control framework COSO 1992 is an excellent tool for understanding and imple- menting internal control. How is internal control defined in the COSO framework? Internal control is broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: ● Effectiveness and efficiency of operations. ● Reliability of financial reporting. ● Compliance with applicable laws and regulations 4. Internal control may need to be applied selectively in a small organization. What are the components of the COSO framework, and what components do you think should be used at the Sunshine Center?
Internal control consists of five interrelated components. These are derived from the way management runs a business, and are integrated with the management process. Although the components apply to all entities, small and mid-size companies may implement them differently than large ones. Its controls may be less formal and less structured, yet a small company can still have effective internal control.