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 few months passed by and the bonus was never paid. The employee got angry and started to rebel against the firm. The absenteeism rate of the company increased. The human resource department implemented a new internal control to obtain real time data over the attendance of its employees. An electronic system was installed that would record the exact time the employee arrived, lunchtime breaks, and the employees exit. The employees were given a code of four digits that they would enter in the machine. The new internal control system backfired. The employees began to cheat by giving their secret number to another employee so that they would punch in for them. Sometimes the employees never went to work and got paid by letting somebody else enter their secret attendance code. It took the company several months to realize some of the employees were cheating. After this debacle the HR department took more serious measures to deal with the problem. They installed a new internal control measures that was safe proof. The new system made the employees punch into a machine that used their fingerprints to log in. Example #2 Three summers ago I got a chance to work with my uncle for a month. His employee was on vacation. My uncle owned a convenience store. He told me when I started working that he got robbed twice that year and he did not know what to do. He could not afford a security guard and he had gotten two quotations for security systems that costs over $1,500. He was having cash flow problems and did not have the money at the time. I decided to help my uncle. He needed an internal control system that was cheap and effective. I got him a used remote security camera system from eBay that allowed him to record all the video recording on his computer. He could view any of the cameras from his home at any time through the computer or smartphone. The system costs only $250. Example #3 In the past I used to work at a supermarket. The store had a lot of customers, thus it had 10 cashiers open at all times. Control of cash was vital to running the operation effectively. The managers used several internal controls measures to safeguard cash. One of them was that each cashier had to fill a short sales report at the end of the shift and count the cash. The cash was then taken to the manager’s office to put it in a safe. The safe was emptied three times per week and a carrier moved the cash from the store to the bank. Example #4 I used to work delivering pizzas. The pizzeria I worked for had some problems with employee not making deliveries and deliveries being late. The manager of the company decided to implement an internal control measure to resolve the problem. When a pizza was delivered the employee had to give the customer a ticked stub that had to sign by customer with the time that the pizza was delivere
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It is important for companies to safeguard the assets and inventory of the firm. Business owners and managers have to protect themselves against internal and external threats. The employees of the company posed an internal threat to the company (Goulding, 2011)…
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To put the terms in proper
at providing the procedures both substantive tests like analytical review procedures that help to gather enough evidence for making a good audit opinion. Apart from that, tests of controls may be used like observation, enquiry and confirmation, inspection and even arithmetic
7 pages (1750 words)Assignment
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