Internal Control & Risk Evaluation
Internal Control and Risk Evaluation
Since offering suggestions for Kudler earlier this month, the request has been received to analyze the risks involved. Suggestions included: improving functions of inventory, accounts receivable, accounts payable, and the payroll system with any company.
When inventory is involved, it is important to maintain accurate records. This will be done for Kudler through automation, enhancement, and maintenance of the inventory. The risks involved in this change are proper training for employees, and the time it will take to accomplish these tasks. If employees are not fully trained, time and money spent on upgrading the inventory system will have been a waste. Inventory could be lost or not accounted for if the time is not taken to train fully and properly. With the use of Goldtech Retail Management system, inventory is updated in real-time so it is very simple for employees to manage.
When attempting to manage accounts receivable or accounts payable it is important to mention the same management system used for the inventory as this system has many features. Again, the main risk involved would be the time taken to train Kudler’s employees on the proper usage of this system. Another risk would be for employees to have a plan in the event of a system failure. There should be a backup plan on keeping track of all inventory, customer orders, and accounts payable. This would include developing firm policies, plans, and procedures in place.
It is extremely essential for any company to keep track of all accounting records and financial statements that are transacted and authenticated by the company in one financial year. This kind of control ensures that the public finances are not misused. Internal controls are also required to ensure timely payment of liabilities and taxes and to uphold the uphold the reputation and credit rating of the company. Internal controls are needed to reduce frauds and criminal activities
Since offering suggestions for Kudler earlier this month, the request has been received to analyze the risks involved. Suggestions included: improving functions of inventory, accounts receivable, accounts payable, and the payroll system with any company.
When inventory is involved, it is important to maintain accurate records. This will be done for Kudler through automation, enhancement, and maintenance of the inventory. The risks involved in this change are proper training for employees, and the time it will take to accomplish these tasks. If employees are not fully trained, time and money spent on upgrading the inventory system will have been a waste. Inventory could be lost or not accounted for if the time is not taken to train fully and properly. With the use of Goldtech Retail Management system, inventory is updated in real-time so it is very simple for employees to manage.
When attempting to manage accounts receivable or accounts payable it is important to mention the same management system used for the inventory as this system has many features. Again, the main risk involved would be the time taken to train Kudler’s employees on the proper usage of this system. Another risk would be for employees to have a plan in the event of a system failure. There should be a backup plan on keeping track of all inventory, customer orders, and accounts payable. This would include developing firm policies, plans, and procedures in place.
It is extremely essential for any company to keep track of all accounting records and financial statements that are transacted and authenticated by the company in one financial year. This kind of control ensures that the public finances are not misused. Internal controls are also required to ensure timely payment of liabilities and taxes and to uphold the uphold the reputation and credit rating of the company. Internal controls are needed to reduce frauds and criminal activities
References: Bagranoff, N.A., Simkin, M.G., & Strand Norman, C. (2008). Core concepts of accounting information systems (10th ed.). New York, : Wiley & Sons. Hunton, J.A., Bryant, S., & Bagranoff, N.A. (2004). Core concepts of information technology auditing . New York, : Wiley & Sons. Internal Controls in Accounting. (2012). Retrieved from http://www.buzzle.com/articles/internal- controls-in-accounting.html O 'Brien, J.A., & Marakas, G.M. (2008). Management information systems (8th ed.). New York, : McGraw-Hill.