Internal Control Essay

919 words - 4 pages

ACCT504 Acct Fin: Managerial Use, Analysis
Senior Faculty:  Anita Wibbert
Keller Graduate
Rajesh Mahbubani
Week 5: Assignment
Sunday, December 1, 2013

1. Inform the President of any new internal control requirements if the company decides to go public. (7 points)

Instituting a system of internal checks and balances would be foremost in my recommendations to the company president since most internal control systems provide for independent internal verification; this principle involves the review of data prepared by employees. To obtain maximum benefit from independent internal verification:
* Companies should verify records periodically or on a surprise basis.
* An ...view middle of the document...

2. Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine. When you advise the President, please be sure to reference the applicable internal control principle that applies. (13 points)

Although it might at first glance appear that having one person perform as both Treasurer and Controller, given that it streamlines many of the companies processes, is a plus, this is also a double edged sword with potentially dire consequences (see below). It is likewise commendable that checks be locked in the accountant’s safe but, as we’ll see, that area of responsibility could be better allocated.

On the other hand, kudos to the fact that he is now using pre-numbered invoices since, under the documentation procedures principle, “all documents should be accounted for; prenumbering helps to prevent a transaction from being recorded more than once, or conversely, from not being recorded at all.”

Buying an indelible ink machine is also, without a doubt, a no-brainer good idea for not only improving internal security but guarding the company from fraud outside the company. Since “washing” checks is a very common form of fraud/theft, an indelible ink machine would go a long way protecting the companies interests

3. Advise the President of what the company is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal control principle that is being violated along with a recommendation for improvement. (20 points)

To begin with, the principle concerning segregation of duties applies to the Treasurer serving as controller since they both purchase and pay for supplies (“an accountant should have neither physical custody of an asset nor access to it”). This is also covered under the segregation of related activities since “making one individual responsible for related activities increases the potential for errors and...

Other Papers Like Internal Control

Internal Control Essay

1704 words - 7 pages Case Study -Internal Control LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The President wants to be aware of any new regulations required of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague

Internal Control Essay

545 words - 3 pages interim date. Next, auditor should obtain the length of the remaining period and assessing the possibility that there have been any significant changes in internal control subsequent to the interim date. 3 Other than that, based on the Auditing Standard No. 5 indicate that inquiry might be sufficient roll forward procedure when evaluation of the preceding factors indicates a low risk that the controls are no longer effective during the roll

Internal Control

834 words - 4 pages Internal Controls are a growing issue for compliance of the Sarbanes-Oxley Act of 2002 (SOX) (Kimmel,Weygandt & Keiso, 2009). Under SOX all companies publicly traded will maintain an adequate system of internal controls (Kimmel, Weygandt & Keiso, 2009). Some of the internal controls characteristics include, control environment, risk assessment, control activities, information/communication, and monitoring. According to Roadmap for an IPO

Internal Control - 1020 words

1020 words - 5 pages Christina OBanion Instructor Ellis ACC/225 Sept. 13, 2009 Internal Control and Bank Reconciliations Problem 8-1A on p. 338 1. Divide responsibility for related transactions is the principle that has been violated. If Heather records all incoming customer cash receipts, and posts all the payments to their respective accounts, how is the owner going to know if she is being honest with the amounts for the receipts and records. She

Internal Control System Justification

672 words - 3 pages Internal Control System Justification Brandy Ritz ACC/445 May 5, 2014 Bunney Schmidt Internal Control System Justification Internal controls are a good way to keep records up to date and valid. Insurance and portfolio approaches are great to have set in place for risk management, but a system of controls would provide extra security with the books. Below is an overview of insurance and portfolio approaches along with why internal

Justification for Internal Control

549 words - 3 pages Justification for an Internal Control System ACC/544 The Controller is responsible for analyzing a company's performance in compliance and reporting, operations and assist management in developing its goals and budgets. They are also responsible for analyzing and managing risks companies may encounter. Performing these tasks require the controllers and financial officers to establish internal controls. The internal control system

Internal Control Case Study

717 words - 3 pages Internal Control Case Study #2 Acct 504 Accounting and Finance Managerial Use Table Of Contents 1. New Internal Control requirements if company goes public (pg. 2) 2. Suggest what company is doing correct and why ink machine should not be purchased. Pg. 3 3. Internal control principle used 4. What are the wrong internal control methods being used and Principle that is

Internal Control System

5108 words - 21 pages INTRODUCTION Internal control, the strength of every organization, has become of paramount importance today in Nigerian banks. The reason being that the control systems in any organization is a pillar for an efficient accounting system. The need for the internal control systems in the organizations, especially banks, cannot be undermined, due to the fact that the banking sector, which has a crucial role to play in the economic development

Acc220 Internal Cash Control

857 words - 4 pages Internal Cash Control Rose Lowe ACC220 October 23, 2010 Anton Narinskiy The scenario for the Idaho Company’s checking account is a grim one. The principals of internal cash controls that have been violated are segregation of duties, establishment of responsibility, independent internal verification, and physical controls. With these violations, there is a possibility monies are misused. There are several suggestions

Internal Control Paper

1546 words - 7 pages building with different useful lives are depreciated on different schedules” (Financial Dictionary, 2011). Although there are many benefits of the IFRS depreciation method, there are also numerous challenges that Clark Corporation will face from the gaps between current accounting practices and the new reporting system. One internal control challenge in migrating from the U.S. GAAP depreciation method to the IFRS depreciation method is the

Accounting Internal Control Interview

1530 words - 7 pages Famima!! Internal Control When looking for a quick drink or fast meal, it is sometimes very troublesome to have to drive to a market and wait in potentially long checkout lines. This sparked the idea for a smaller store that only carries the most frequently bought items for the customer’s convenience. Nicknamed convenience stores for very obvious reasons, these little establishments exist all over the world and carry just about any little

Related Essays

Internal Control Essay 877 Words

877 words - 4 pages internal control a. What is internal control? Internal control is a process, effected by an entity’s board of directors, management and other personnel, designated to provide reasonable assurance regarding the achievement of objectives in the following three categories: * Reliability of financial reporting * Effectiveness and efficiencies of operations * Compliance with applicable laws and regulations Internal control is

Internal Control Essay 1436 Words

1436 words - 6 pages Internal Control FAQ What is Internal Control? Internal control is the integration of the activities, plans, attitudes, policies, and efforts of the employees of a department working together to provide reasonable assurance that the department will achieve its mission. More simply, internal control is what a department does to see that the things they want to happen willhappen…and the things they don’t want to happen won’t happen.   Why are

Internal Control Essay 2429 Words

2429 words - 10 pages internal control Internal Control BUAC 782 Brendan Conway Shalini Sharma Yi Li Jiayu Shan Xiaoran Wang Introduction As a result of the recent scandals of companies such as Enron and WorldCom, the Sarbanes-Oxley Act (SOX) was enacted to preemptively curb fraudulent financial reporting. Since its enactment, SOX has strengthened requirements of both internal controls and procedures for financial reporting. Internal control

Internal Control Essay 4547 Words

4547 words - 19 pages assessed how lack of internal controls affected good corporate governance and aimed to bring out elements of good corporate governance. It emerged that failure to effectively implement internal controls contributed significantly to poor corporate governance. The study discovered that internal control system overrides and the issue of “fact cat” directors also contributed to poor corporate governance. The study recommended that there is need for the