Canyon Rental Case Summary

Operations is separate from the accounting department. The employees in operations handle promoting the products. Also, Operations is in charge of making the products. The company’s accounting system is handled in-house by the cashier and the bookkeeper and by the accounting firm hired to handle the businesses’ financial reporting. The cashier handles all sales through the register. The register is balanced against the drawer each night by the bookkeeper and a deposit made the same day. The bookkeeper gives the accountant the drawer receipts and bank receipts for journal entries and later reports. The accountant checks all cash received and payments made against bank statements and collected paperwork. There is not a single person assigned to do all duties.

It follows a strong internal control system for cash. A separate person is appointed to approve all purchases, payroll and any disbursement of cash. At the end of each month company prepares bank reconciliation statement to reconcile cash book balance and bank statement balance. Company keeps proper inventory record system. All these prevent frauds and ensure smooth functioning of the business.

#2. Internal Control Risks; audit planning decisions. Some internal control risks common among large, high-volume retail stores include dealing with inherent limitations and potential fraud. Even if a well-designed internal control system is in place, the employees using it are ultimately the deciding factors in its effectiveness. For example, management may instruct an employee or easily-influenced executive (of another company) to alter information or confirmations or multiple employees may conspire to steal assets or misstate records (collusion; misappropriation of assets).

The design and implementation and objectives of company controls are not adequate to meet the control objectives. The control environment control objective is ineffective. This control objective lacks a written policy on ethical conduct, is lacking oversight from the board of directors and audit committee, lacks a consistent style and philosophy from management, and lacks a strong commitment to competence. The risk assessment control objective is effective but lacks any antifraud program and controls. The information and communication control is ineffective. A virus has been detected and is affecting the files of the company. This control is lacking a strong IT department. The general controls financial reporting control objective is effective but is weak in detecting or preventing material misstatement. The monitoring control objective is ineffective; this control has need of an internal auditor.

1. To have a strong internal control system, a business must have good administrative controls. Administrative controls include: A. B. C. D. the reconciliation of the bank statement. the accuracy of the recording procedures. assessing compliance with company policies. maintenance of accurate inventory records.

Some internal controls risks common to high-volume retail stores would be theft of inventory, inventory accounting methods, false accounts receivable confirmations, separation of

Overall Strength: in general, the article provides structure to a concept that is very intangible by: (a) describing the nature and the functions of control; (b) segregating the MCS into categories: core control system, organizational structure, and organizational culture; (c) illustrating how to apply the control model (satisfied my approach) (d) provides a basis for designing and evaluating the system. The manner, in which the model is presented, with its use of figures, further emphasizes the structure of the model. See below on further emphasis on parts (a) -(c).

Canyon Ranch should absolutely implement a CRM strategy. For years Canyon Ranch has been the leader in the luxury segment of the spa industry, with a unique value proposition. However, competition has started becoming an increasing threat, as the trend has shifted towards convergence between medicine and spa services. There are a number of new players, and in order to maintain that point of differentiation, Canyon Ranch will need to build their relationships with their customers. In order to do that, they need to implement a CRM strategy.

The chances of failures can be decreased by executing the checks on the systems. These keep an eye on the systems preventing risks from occurring, and these checks are avoided as the interior controls. The motivation behind the inner controls is to keep the organization safe from risks associated with the modernized accounting-system risks. Organizations change their manual accounting systems to computerized accounting systems for different reasons, this incorporates the points of interest, and the explanation behind utilizing electronic accounting information is instinct. The organizations embrace the policies of their

Carlson Rezidor Hotel Group, like most large organizations, uses all four forms of control identified by Knights and Willmott (2012); Direct control of behaviour, control through

Canyon Ranch’s strategy should include the full integration of the CLS and Guestware systems to give the managers on duty access to consolidated information so they can take any required actions immediately. POS software should be installed in the restaurants and salons. They should also consider online options for customer bookings and completion of health questionnaires. Customers should be able to book an entire stay online, chat with a customer representative online, as well as complete then submit their health questionnaires online if they opt to.

With every internal control weakness a company needs to identify either a control policy or control procedure that will help prevent error or fraud from occuring in the future. Based on my suggestions as to what weaknesses existed at Goodner Brothers, Inc. I have suggested the policies or procedures that could be implemented to help prevent future issues. The internal control I would implement to hinder employee access to the accounting system would be to secure all computer programs with individual usernames and passwords to prevent access from others. The bookkeeper should be the only employee with access to the accounting system and to test this procedure the company would need to try and access the software without a username and password. To monitor the storage warehouse situation, the company should install computer scanning systems and video cameras at each location to supervize whether tires are being scanned in and out upon delivery and pick-up and to determine who and when these transactions are taking place. Semi-annual reviews should be conducted by sales managers to evaluate their sales representative. In addition, strengthening the tone at the top mentality should lie in the hands of each owner by personally reviewing all sales managers to create a top down effect.

“The control environment sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.” The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published the Internal Control–Integrated Framework in 1992. As summarized above one can see the importance of the implementation of an effective control environment, as it sets the foundation for the other 4 components of internal control. The control environment is made up fundamental smaller components. The ones that were particularly relevant to BMIS are the use of board of directors and audit committee, management philosophy and operating style, and human resource policies and practices. If management doesn’t prioritize control, then the rest of the organization will not put precedence on following policies and procedures either. This was clearly evident at Bernard L. Madoff Investment Securities LLC (BMIS), and ultimately led to their downfall.

There are several procedures that should be considered when implementing internal controls for your business. There should be a segregation of duties between different individuals to lessen the threat of

COSO cites the control environment of the organization as the foundation of any internal control structure. The control environment reflects the overall attitude or actions of the board of directors, management, and others concerning the importance of internal controls in the organization. This overall attitude of upper management sends a message to the rest of the organization referred to as the “tone at the top.”For example, if upper management stresses high-quality products, a strong positive message is sent to the organization. This would create a strong internal control environment. On the other hand, if upper management has a reputation of looking the other way regarding policy violations, a negative message is