This website uses cookies to ensure you have the best experience. Learn more

Internal Controls Essay

1929 words - 8 pages

Internal Controls for Inflows
Rosa Alvarez, Quenana Kent, Renee Witucki, Steven Mitchell, K’Dawn Saucedo
October 15, 2012
Robert Cornett

Internal Controls for Inflows
Team C Consulting Firm Inc. was hired to review ABC Manufacturing Company’s policies and procedures. Team C Consulting Firm Inc. reviewed several areas of the business such as, cash, sales, accounts receivable, inventory, and production policies and procedures. Based on Team C Consulting Firm’s review and findings, ABC Manufacturing Company has weaknesses in each of the mentioned areas. Therefore, it is necessary ABC Manufacturing Company is provided with a comprehensive proposal of internal controls for each ...view middle of the document...

Separation of duties and proper authorization are great controls to reduce to the risk of cash misappropriation, but proper documentation and account balance checks are vital in ensuring that the amount of cash that a company shows in its book is actually there. Numbered checks are important in keeping track with how many checks the company has written, and frequent bank reconciliations will allow the company to match the cash amount recorded in the books with the cash amount that is on deposit at the bank. If there is a discrepancy between these two numbers then management knows that there are problems somewhere, and they can effectively investigate the situation. The final control measures that should be implemented are physical controls. These types of controls are physical security measures that protect cash such as locked boxes to store the company checks and locked drawers to keep petty cash and any other cash that is on hand prior to bank deposit. Physical controls are probably the easiest control measure to implement and they are usually the most effective at protecting the cash that a company has on hand.
Sales Controls
A control over sales is an important tool not only for the company, but also for the customers. The controls that must be applied over sales are software controls, this are made to protect against unauthorized orders and the customers privacy, for credit approvals to certify that are being placed for legal customers and customers who have the means to pay their debt, numerical sequencing for all documentation involving to a sale beside with proper signatures at all points of the transaction, and controls for price and invoice changes.
* No sales order should be entered without a customer order.
* A credit-check code or manual signature should be recorded for authorization.
* Access to inventory and the shipping area should be restricted to authorized persons.
* Access to billing terminals and blank invoice forms should be restricted to authorize personnel.
* Accountants should be instructed to record sales and accounts receivable when all of the supporting documentation of shipment is in order.
* Care should be taken to record sales and receivables as of the date the goods and services were shipped and the cash receipts on the date the payments were received.
* Customer invoices should be compared with bills of lading and customer orders to determine that the customer is sent the goods ordered at the proper location for the proper prices and that the quantity being billed is the same as the quantity shipped.
* Pending order files should be reviewed frequently to avoid failure to bill and record shipments.
Auditors must perform a revision once in a while to verify their understanding of the procedures. The revenue and collection cycle revisions includes a sale from the initial customer order through credit approval, billing, and delivery of goods, to the entry in the sales journal and...

Other assignments on Internal Controls

Internal Control Essay

753 words - 4 pages Natasha Todd January 8, 2011 Internal Controls Internal Controls are certain procedures that are put into place to help control the money in a business and keep track of all of the accounting, assigning different people within the workplace to keep track of things so everything turns out right in the end. The two primary goals to primary controls are to protect a company's assests and to keep all records within the business


330 words - 2 pages outcomes high degree of internal, construct, and statistival conclusion validity Differential Attrition: Both groups lose people so is there still a similarity between he subjects? Internal Validity: controls threats, greater results lower evaluations had stronger effects Replication: two studies are better than one Types of Reviews: Single Study: pilot study…is this going to work? Narrative Study: Comparison of many different studies

Checklist For Internals

502 words - 3 pages Checklist for Evaluating Internal Controls Internal control evaluation checklists are meant to help a company assess the structure within the organization. An effective internal control guarantees the integrity of financial reporting. There are five components of an internal control system, which include: control environment, risk assessment, control activities, information and communication, and monitoring. Not only are there five components

Self Assessment

262 words - 2 pages ACC/400 Self-Assessment Questions ------------------------------------------------- Week One: Assets and Internal Controls Note: Answers to questions appear on the last page of this document. All the following are principles of internal control except: Having a yearly audit by an independent auditing firm Segregation of duties Documentation procedures Establishment of responsibility Physical, mechanical and electronic controls

Accounting 409 Quiz

502 words - 3 pages and damage to the organization's reputation.a. ISACA's control objectives for information and related technologyb. COSO's internal control frameworkc. COSO's enterprise risk management frameworkd. none of the above |   | Save Answer |   | 6. (Points: 0.5)   |   | The audit committee of the board of directorsa. is usually chaired by the CFO.b. conducts testing of controls on behalf of the external auditors.c. provides a check and balance

Ljb Company

1249 words - 5 pages MEMORANDUM MEMORANDUM To : Mr. XYZ President, LJB Company From : M F Annigeri, T.E.L & Company, PA Date : 01-Oct-2011 Subject : Results of TEL Review of LJB Company Internal Controls Introduction: This memorandum transmits the review results for LJB Internal Controls requirement for the upcoming public issue of LJB. Further it also provides the details of current practices of Internal Controls and future

Case Study 2 Acct504

993 words - 4 pages Dear Sir, Based on the information which was relayed to me I wanted to formally address your concerns with internal control and acceptable usage guidelines at LBC company. As I am sure you are well aware, your intension on taking the company public will demand very tight internal controls and the highest standards for your employees. I have prepared a few remarks, and suggestions which I recommend you implement before your company goes

Effect Of Unethical Behavior

498 words - 2 pages concerned with financial gain that the idea that there was a need for better internal controls did not exist. As long as the corporation was providing financial statements that presented the picture of a company continuing to grow and make money, it was assumed that the company ran smoothly. As a result, it was far too easy for corporations to overstate the value of assets or understate liabilities causing the true value of a corporation to be

You Decide

3346 words - 14 pages establishment, administration, and evaluation of internal controls. COSO Framework Internal control is defined as a process - effected by an entity's board of directors, management, and other personnel - designed to provide reasonable assurance regarding the achievement of the following objectives: * Effectiveness and efficiency of operations * Reliability of financial reporting * Compliance with applicable laws and regulations So the

Bis 303 Week 2 Dq 1

381 words - 2 pages Week 3 Assignment 2 Hospitality Information Systems and Users.docx BIS 303 Week 3 DQ 1.docx BIS 303 Week 3 DQ 2.docx BIS 303 Week 4 Assignment 1 Cost Controls and Resource Management Systems.docx BIS 303 Week 4 Assignment 2 Internal and External Customers.docx BIS 303 Week 4 DQ 1.docx BIS 303 Week 4 DQ 2.docx BIS 303 Week 5 Assignment 1 How Marketing at Baderman Island Uses Information Technology.docx BIS 303 Week 5 Assignment 2 Internal


811 words - 4 pages BTN 8-8 HITTING THE ROAD Internal control is an action plan that includes policies, procedures and method that are created and used by the business to monitor and control business activities. Internal controls do not provide guarantees, but they lower the company’s risk of loss. An effective internal control helps a department to protect assets, ensure reliable accounting, promote efficient operations and urge adherence to company policies

Similar Documents

Internal Controls Essay

370 words - 2 pages Case Study 2 Due by Sunday of Week 5, 11:59 p.m., Mountain time (Learning Objectives 2, 4: Explain the objectives of internal control; evaluate internal controls) Each of the following situations reveals an internal control weakness: 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

X/Bis Week 6 Essay

868 words - 4 pages Internal Controls. Internal controls are a certain system that includes actions and methods with emphasizing organization’s security and intention to protect its assets and keep the accounting process trustworthy and precise (Weygandt, Kimmel, Kieso, 2008). Protecting a company’s assets is necessary because of the danger resulting from robberies or even employee theft. Improving or keeping the accounting process and records correct is an

Fi504 Course Project 2 Essay

376 words - 2 pages FI504 – Accounting and Finance Case Study #2 Evaluation of Internal Controls Attention Mr. President, The Sarbanes-Oxley Act of 2002 is a United States federal law which sets new or enhanced standards for all U.S. public companies. The reason that this Sarbanes-Oxley Act of 2002 bill was created was because of a number of major corporate and accounting scandals. When these scandals occurred they cost investors billions in losses

Acc 545 Essay

1408 words - 6 pages WEEK 4 –INDIVIDUAL ASSIGNMENT 5.3 What are the primary and secondary reasons for conducting an evaluation of an audit client’s internal control? A. The auditor has two primary reasons for conducting an evaluation of a company’s internal control. 1) First, Sarbanes-Oxley (SOX) requires an audit of management’s assessment of internal controls for publicly traded companies. This type of audit is an integrated part of the financial