Accounting Ethics Paper 1

1840 WordsApr 30, 20128 Pages
Ethics Essay/Case Assignment 1) a. Explain and describe characteristics of an effective system of internal control. An effective system of internal control limits the probability that fraud will take place. Within an effective system on internal control an organization will safeguard their assets, encourage employees to follow company policy, promote operational efficiency, strive towards the most accurate and reliable accounting records, and complies with all legal requirements. Internal controls not only helps to eliminate fraud but also waste and inefficiency. There are five components that are used to break down internal control. The first is control environment which is at the top such as the managers and CEO’s of companies…show more content…
Downtown Kalamazoo was led by a board of directors comprised of civic leaders. Flynn’s embezzlement went undetected until Downtown Kalamazoo couldn’t pay its bills. Give four ways Flynn’s embezzlement could have been prevented. There are four or five ways Flynn’s embezzlement or most organizations embezzlements could have been avoided which include smart hiring practices along with separation of duties. Like mentioned earlier no one person or group should have control of transactions from the start to the finish and it is important to do things like background checks when hiring for positions that people would have the ability to commit fraud. 4 Comparing and monitoring is next on the list which is important because it forces people or departments to cross-check their records, budget their activities, and can be used to audit the organization. Adequate accounting records are also very important as they would be supported along with either electronic records or hard copies to show everything that has been processed throughout the organization and will make it very easy to check everything quickly when that needs to be done. Limited access to records and assets can really make it hard for someone in an organization to commit fraud. If the accounting department never has access to the actual money and the people in charge of the money have no access to the accounting of the organization other than sending them the info over that the
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