Case Study 2
Situation A: -
In evaluating the internal control over inventory for the Williams Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work.
Missing Internal Control characteristics for William Oil Services: -
In the William’s case oil Services Company, The missing internal control characteristic is Monitoring Control, The clerk is the only person who has to maintain all the ...view middle of the document...
She allowed them to use their own credit cards so they could get the frequent flyer points. She required them to turn in a summary of the travel expenses quarterly.
Missing Internal Control characteristics for Scott Sales Services:
According to the Scott Sales services, there is missing internal control characteristic is Information system. Because there is large number of data entries, Nicole Lopez was not at all maintaining travel & expenses reports of the sales team.
According to this situation, initially sales team travel and expenses data entries were few and the properly when there was growth in the economy Nicole Lopez was managing those reports sales team were traveling more frequently and because of that the travel and expenses data entries were increased rapidly and Nicole was unable to manage them properly she told the sales team to manage daily meal for 100$ and receipts are not necessary to show and allow them to use their own credit cards for flight tickets and she told sales team to submit summary of reports quarterly. Nicole Lopez was not perfect and neither responsible person for in and out accounting information of the company
Solution for the Problem:
The solution for the internal control weakness of this situation is to maintain proper Information System which is as follows:
-How accounting information enters and exits company
- Process, and report transactions must be captured by system accurately
-Information and Communication: A business can design the best internal control system in the world; there is little chance of it benefiting the company if the employee doesn’t know about that. The information and communication part of the internal control framework is charged with making sure that information gets where it needs to be in the organization. It includes information from company and While this includes information to management. For instance, it includes information from employees making e, implementation of a policy to report suspected fraud would be included in the information and communication part of the framework.