StudentShare solutions
Triangle menu

Internal Control and Risk Evaluation - Essay Example

Free

Extract of sample
Internal Control and Risk Evaluation

The company is relying on sale invoice as the only source document to claim payment on sales. This may create an avenue for collusion between buyer and store keepers; thus, the company should consider maintaining sales record for easier reconciliation of sales units recorded as sale out and invoice records (Kumar & Sharma, 2005). To enhance efficiency, the source document should be prepared by an independent person other than the person receiving the orders to minimize chances of collusion. All the cash collection should be recorded on cash register and deposited on a daily basis. This should be followed by monthly reconciliation between the cashbook and the bank statement to identify any deviation for corrective actions. The firm should develop measures for making follow up of bad debts before writing off at the income statement. These measures include factoring debts as it will ensure a steady flow of revenue and limit chances of bad debts to the firm (Hightower, 2008). With analysis of the account payable data flow chart, the chart does not show the breakdown of the various stages involved in making payments. There is only one point that satisfies all the payment claims; this posses a great risk to the firm because the company may end up paying to dummy accounts. The company should ensure segregation of duties at this point to incorporate verification stage, calculation of figures and authorization stage as it will eliminate chances of collusion. In this company payments made through

Check these samples - they also fit your topic

The audit report and internal control evaluation. Apollo Shoes Inc
The audit follows the basis on the international Standard of Auditing and general accepted audit standards of United States of America. Key target of the audit is to obtain a reasonable assurance on whether there are any material misstatements on the financial statements.
6 pages (1500 words) Essay
Control projects, capital management, risk management and evaluation
The researcher will be seeking out answers to the following questions: What are the main risk and safety concerns in the activities of the projects? How can these risks be managed? Should a single system framework be implemented? What measures can be taken in the risk control procedures? Why are changes to the Safe Management System necessary? What does it mean for the organisation and our people?
28 pages (7000 words) Essay
The impact of good corporate governance in internal control and internal auditing function to prevent fraud and detection
In addition, the level of fraud in organizations in public sector and private are increasing, therefore, the companies with good corporate governance emphasize in value in internal control and internal auditing have less likely to be in dangerous in fraud.
13 pages (3250 words) Essay
The Audit Report and Internal Control Evaluation
These issues have been highlighted in the audit report presented as under: Anderson, Olds and Watershed, LLC Certified Public Accountants Shoetown ME 00001 Independent Auditor’s Report To the Stockholders Apollo Shoes Incorporation We have audited the accompanying balance sheets of Apollo Shoes Incorporation, as of 31st December 2007 and the accompanying income statement, statement of changes in equity and cash flow statement for the year ended 31st December 2007.
3 pages (750 words) Essay
Internal Control
Two of the primary goals of internal controls are safeguarding the assets of a company and to prevent against fraud. Three of the main components of an internal control system are the control environment, control procedures, and the accounting system. Some factors that may influence the control environment are regulations, personal policies, and monitoring of responsibilities.
3 pages (750 words) Essay
Accounting - Internal Cash Control
Duties should be segregated so that the purchasing agent should only be given the responsibility to approve arrival of goods. Payment and record keeping should be done by the treasurer. Secondly, the company should purchase a new
4 pages (1000 words) Essay
Payroll System and Internal Control
ud, internal control weaknesses and problems, suggested control methods relating with this particular case study along with a summative conclusion will also be taken into account in the discussion of this paper. A payroll system is used by an organisation primarily in order to
8 pages (2000 words) Essay
Internal cash control
In addition, the checks are not safe because they are kept in an unlocked file cabinet (Kimmel, Weygandt & Kieso, 2011). On the other hand, both the purchasing agent and
3 pages (750 words) Essay
Risk Management and Control Effectiveness
According to Oppliger (2003), management of information security in organizations is very vital as it ensures that the security of information is
4 pages (1000 words) Essay
Internal Control
e biggest problems that was identified in the Enron scandal was the lack of internal controls to prevent shady executives from stealing money from corporations. As a direct consequence the Sarbanes-Oxley Act created section 404 of the Act which dealt directly with the internal
1 pages (250 words) Essay
internet transfer, poses great risk of money loss to the company. The company should ensure that payment to any account is authorized and that all details confine to the client specification. The data to this account should be encrypted to ensure secure transfer. The chart does not indicate a specific time for payment; the company should have predetermined dates for payment to ensure that special arrangements are made such as security over cash payment (Hightower, 2008). The company should have a payroll flow chart that has ways of recording the total time worked. This will minimize the chances of paying for idle time. The firms are paying it wages through bank account; thus, it should ensure monthly wages reconciliation on recorded wages claimed and the bank statement. This will enable the firm to identify the dummy workers and any fictitious payment made through the bank. It will also help in identifying the unclaimed wages, so that appropriate actions can be taken to identify the employees who never claimed their wages. The duties of preparing the payroll should be segregated and rotated on a regular basis to ensure that wages are not inflated and that no dummy workers exist. The firm should ensure that workers identify themselves as the report, when leaving and when claiming wages to detect ghost workers (Kumar & Sharma, 2005). The firm has an inventory purchase flow chart that delineates the ordering process of goods and how they are paid for. However, the chart does not cover all the risks exhaustively; the chart does not show any recording on purchases received by an independent person for easier reconciliation. Stock always form substantial cost in most of the organizations; therefore, procurement procedures should be highlighted clearly. The chart does n

Summary

Topic: Internal Control and Risk Evaluation Date: The system has tried to analyze inherent risks that revolve around sales, account payable, wage payment and inventory. In relation to sales control do not incorporate the procedures for evaluating and classifying new clients…
Author : dorcas27
Internal Control and Risk Evaluation essay example
Read Text Preview
Comments (0)
Click to create a comment
Contact Us