Internal Controls And Corporate Controls

1007 Words5 Pages
Internal Controls “Internal controls are policies and procedures put in place to ensure the continued reliability of accounting systems” (Ingram 2017). WorldCom’s attempts at maintaining internal controls are less than favorable. Segregation of duties enables the division responsibilities to ensure that no employee completes two similar tasks. The CEO’s monitoring of WorldCom’s financial processes shows that the company has a lax segregation of duties, which makes it easier to commit fraud. Access controls protect financial data from unauthorized access, however, WorldCom’s extent is password-protected computers. No access inventories are taken to monitor employee usage, so there is no trail of when employees are doing during work.…show more content…
It is possible that Ebbers and Sullivan used their power to overwrite certain approvals to increase the company’s bottom line (Button 2015) (Ingram 2017). Weaknesses Everyone is responsible for implementing and maintaining internal controls. Arthur Andersen, LLP is partly responsible for the internal controls since they need reviewing during an audit. WorldCom needs to establish relations with a reputable auditing firm and to hire an executive team who understands the important of workplace ethics. WorldCom management needs to communicate their expectations to employees and introduce fraud awareness training. Fraud awarness training includes an ethics hotline that employees can call into when an incident occurs. One of WorldCom’s weaknesses is its segregation of duties. WorldCom needs to establish an effective segregation of duties that combats the opportunity for fraud to be committed. Multiple employees need to be tasked within the same financial process to ensure that not one employee has two similar tasks. WorldCom never fully implemented its vacation policy, so it is in the company’s best interest to see that through. More employees taking vacation time will reduce the opportunity to commit fraudulent activities (Draz 2011). Besides a password-protected system, WorldCom needs to create a program that tracks an employee’s computer activities as a preventive fraud measure especially if accessed over
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