Analysis Of The Narrative And Observation Of Auditing Alchemy's Workplace

1749 Words7 Pages
System Strengths Based on the information provided in the narrative and observation of Auditing Alchemy’s workplace, it appears that the organization has implemented internal control practices, policies, and procedures in an attempt to minimize organizational risk. The strengths of Auditing Alchemy’s internal control system include effective warehouse management, a perpetual inventory system, various checks and balances, and a full time security staff. The existence of these internal controls allow the organization to inventory minimize instances of risk and protect their physical sphere inventory. The narrative indicated that two of Auditing Alchemy’s internal control strengths were their effective warehouse management and also their…show more content…
In the circumstances of Auditing Alchemy, the narrative stated that the organization has not performed a physical count of inventory in quite sometime; with management having uneasy feelings about organizational profitability and performance, a physical inventory count may provide additional insight into any potential inventory issues. Another strength of Auditing Alchemy’s internal control system is there extensive amount of check and balances throughout the production process. The organization sets budgeted production goals based on historical cost and usage standards for both the organization as a whole and different product types. Each type of sphere is placed in its respective bin and is tallied; once each sphere has been differentiated and tallied, they are compared against the production budget. The actual sphere production is compared with budgeted production amounts to verify that production was efficiently and effectively performed. Production staff and production manager Jennifer Smith verify that the budgeted and actual production amounts are in agreement. If there is variance between budgeted and actual production, the production manager requires staff to recount actual production to verify that no human or clerical errors have occurred. If the actual inventory count still does not match the budgeted production, then the production tally sheet is handed over to the production manager for
    Get Access