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National Capital Trust Case Analysis

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National Capital Trust Case Analysis
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Internal control is a business process for assuring achievement of an organization’s objectives. Firstly, internal control plays an important role in safeguarding the organization’s assets. With carefully examination and monitor, internal control is able to discover any anomalies inside the organization, such as inventory spoilage. Moreover, internal control can help improve the efficiency and effectiveness of business processes. For example, through internal control in a manufacturing company, the manager can explore some non-value added activities. Eliminating non-value adding activities can save significant organization’s resources for better development. Additionally, internal controls prevent and detect fraud happen in the organization. Employees will less likely to perform misconduct since the rigorous internal control will find out who is conducting harmful behaviors. Furthermore, internal control improve the completeness and accuracy of accounting record, thus improves the reliability of the accounting information. This can be achieved by rigid internal audit. Lastly, internal audit can ensure that preparation of financial information on timely basis.

National Capital Trust has internal control but not very efficient. For example, the requirement of bank reconciliation monthly is to make sure that the clients’ assets is secured. Pre audit prior to a payment being made is to ensure that the cash disbursement are exactly on clients’ behavior. Also, it can prevent that employees taking any advantages from payments. The hire standards is originally going to make sure that employees have necessary skills therefore improve the efficiency and effectiveness of business process, and also reduce the training cost.

Individuals as trustees are facing some kinds of risks. The first risk they face is the security of the clients’ assets. This risk is low as most of the asset will be carefully saved. Since the

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