Essay Acct 504 - Case Study Ii - Internal Controll

1504 Words Jul 1st, 2013 7 Pages
Case study II – Internal control

Managerial Accounting and Finance – ACCT 504
Keller Graduate School of Management
May 2013 Session
Date of June 11, 2013

Table of Contents Introduction 1 Internal control rules and regulations requirements before going public 1 THE BAD – Things that the company does poorly 2 Recommendations to the President 4 Conclusion 6 Bibliography 7

Case study II – Internal control
Introduction
Internal control refers to methods, techniques and measures that are practices by a company to safeguard the assets, enhance reliability of its accounting records, increase efficiency of its operations and making sure everything they do is in line with laws and regulations as ordered by security and
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339). According to the explanation provided, one person is both controller and a treasurer, and the petty cash procedure is overcrowded with many hands involved in the process. The report also explained the use of notes as one of sources of documents which is documentation violation and instead it should be receipts. There is also violation of physical control which relates to lack of safeguarding of assets and enhance the accuracy and reliability of the accounting records (Kimmel, Weygandt, & Kieso, 2011, p. 341). Checks are left out over the weekend, with easy access to the drawer. There is also a violation of independent internal verification which involves review of data prepared by employees and that can be done on surprise basis, or by an employee who is independent of the personnel responsible for the information should make the verification (could be the President), and discrepancies and exceptions should be reported to a management level that can take appropriate corrective action (Kimmel, Weygandt, & Kieso, 2011, p. 342). There is one more violation of human resources controls which includes bonding of employees who handles cash, rotating employee’s duties and requires some of them to take vacations, and conduction of background checks (Kimmel, Weygandt, & Kieso, 2011, p. 344). In the case study report it was explained that the President was embarrassed after finding out that one of the employees had bad background history that could be

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