Got a tricky question? Receive an answer from students like you! Try us!

KPMG: The Internal Controls Practical Guide - Essay Example

Only on StudentShare
Author : dgoldner

Summary

The paper tells that Office Supplies Ltd has divided the activities involved in the sales cycle among four units i.e. order entry, shipping, invoicing and accounting. The key controls that could be relied on for these four divisions are as follows: order entry, shipping, invoicing and accounting…

Extract of sample
KPMG: The Internal Controls Practical Guide

From the viewpoint of a researcher, the controls that need to be tested must incorporate as much information from external parties as possible. This specially applies to the case of Office Supplies Ltd, wherein most of the documents such as sales orders, invoices, bill of lading etc involve manual entries and are subject to human error. A possible road map to follow when testing for controls for Office Supplies Ltd is as follows:
-Gather evidence for the proper division of duties between the units as depicted in the flowchart. The responsibilities should be separate in terms of hierarchy. Moreover, extent of supervisory control should be looked into. This would ensure accountability and hence effectiveness of internal controls.
-Since invoices, sales order etc are prepared manually, a separate check should be taken to ensure that all documents are properly numbered and in order. Hence, archiving by ‘customer’ only may not be effective for such purposes, and a separate record keeping mechanism should be in place to ensure that all numbered documents are in place.
-A sample of transactions would be selected from each month to ensure uniformity in practices all year round (My CA Site 2009). It may happen that diligence required by the personnel responsible for the relevant activities may be lacking based on motivation levels, or seasonality, for example the Christmas season. The sample of transactions should be reviewed to deduce whether the data entered has been verified by a second party. ...
Download paper

Related Essays

Issue in contemporary auditing
Governance Reporting Reporting is a vital way of sharing financial information. Therefore, it will be our responsibility to report to you on whether the financial accounts have been arranged according to the accounting strategies as stated by you. Furthermore, we would report according to auditing process undertaken by us, on whether anything has emerged to our consideration for specifying that the revenue figure described in financial reports has not been appropriately extracted from book of records, or book of records do not record and clarify the transactions, with respect to the…
12 pages (3012 words)
Internal Controls Assignment
The Sarbanes-Oxley Act of 2002 was passed generally for the purpose of restoring investor trust and confidence. The demand of the government, investors and the American public sought a standard and guarantee on the accuracy of financial reports. So, Section 404 of the mentioned law was strictly devoted in requiring management to assess and report on the effectiveness of internal control over financial reporting or ICFR. Bergen (2005) reported that “the concerns through making executive more responsible for company accounting statements, redefining the relationships between corporations and…
3 pages (753 words)
Flinder Valves and Controls Inc.
Strength of FVC …
4 pages (1004 words)
AICPA Ethics & COSO Framework for Internal Controls
The first issue is about how Harold Potter gained employment and shares with Dumbledore Enterprise, a public company. Being supported by his uncle to gain entry to the company is not a serious issue. However, once he gained membership to the AICPA, there were implications that made his continuous involvement in Dumbledore risky. Section 101.01 states that a person should be independent in performance of professional services (Independence, 2011 para 1). This therefore means that once he was connected to Dumbledore as a previous employee and a shareholder, he would lose his independence and…
9 pages (2259 words)
Johnson Controls
Information systems are also considered long-term capital investment projects. The following are some of the traditional capital budgeting models used to evaluate capital projects: The payback method The accounting rate of return on investment (ROI) The net present value The cost-benefit ratio The profitability index The internal rate of return (IRR) These methods rely on measures of cash flows into and out of the firm. Capital projects generate cash flows into and out of the firm. The investment cost is an immediate cash outflow caused by the purchase of the capital equipment (capital…
5 pages (1255 words)
Internal Control
Today most organizations utilize computerized accounting systems. The employee that bares the responsibility over the design and functionality of the internal control system of a company is its comptroller. A good internal control system relies on the delegation of responsibilities to the different members of the accounting staff. Internal control systems must be constantly maintained. When designing an internal control system it is important to remember the accounting materialism principles which states that information is only useful if its benefits outweigh the costs. Training and…
3 pages (753 words)
Internal Controls
Cash is the most important asset of a company due the fact it can be used to pay for the purchases, payroll, and debt obligation of a firm (Deloitte). In the past I have been exposed to internal controls in the workplace. The section below discusses four experiences of mine with internal controls in the workplace. Example #1 A few years ago I worked for a company that had just been opened. The firm operated in a niche industry. I was selected during the first round of recruiting. The company promised its employees a $6 productivity bonus if the employees surpassed the daily production quota. A…
4 pages (1004 words)