Internal Control Weakness and Corrective Actions Essay

686 Words Apr 3rd, 2011 3 Pages
Internal Control Weakness and Corrective Actions
Fan Company A has eight weaknesses with the current internal control system. I will name each weakness and the corrective action for each weakness identified that will improve the internal control system to help protect the company’s cast and inventory assets and to prevent unethical actions of employees.
The first internal control weakness that I found is the accountant decided not to check the references on the two part time employees. The accountants reasoning were that the references that she had previous experience with did not provide useful information. This procedure is bad internal control because the employer can be held liable if the employee does any unlawful act and the
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This will decrease the chance of theft in the office.
The fifth internal control weakness that I found was that the afternoon shift employee summarized the day’s receipts and printed off the daily cash and credit sales tallies. The corrective action that should be taken here is for the employee to count their draw at the end of their shift but the employee should not have access to the accounting records. This should be handled by another employee.

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The sixth internal control weakness that I found was that the accountant was overseeing the retail outlet by him/herself. The corrective action would be for more than one person to oversee the retail outlet to perform different duties including placing orders, receiving product, and paying vendors. Having separation of duties lessens the chance of theft and errors.
The seventh internal control weakness that I found was that inventory was not done on a regular basis. The last inventory was completed by the store employees six months ago. The corrective action that I found was that for the inventory to be counted daily or weekly to help keep all supplies and product needed on hand. This will also decrease the chance of theft of product or loss of product if kept track of more closely.
The eighth internal control weakness that I found was that the…

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