Essay on Internal Controls Case Study

First and foremost, the accounting system used should be updated. The case stated that the system was 30 years old and that prior accounting period transactions could not be locked down, which enabled internal control processes to be bypassed. Enhancing internal

There are many rules companies must follow whenever documenting financial information or any other data which is gather during any business transactions. In order for said companies to report financial information internal controls have to be put in place as companies have to adhere to certain laws and regulations. Internal controls can be defined as a process which companies follow in order to ensure all financial reporting is done in a reliable and lawful manner. Some think of it as a system which works within a system as it plays a major role on the success of a company’s accounting system. At the organizational level, internal control objectives relate to the reliability of financial

Internal controls are vital to any company’s business and financial sustainability. Internal controls consist of measures taken by a company safeguarding against fraud, and theft. Internal controls ensure accuracy and reliability in accounting data, and secure policies within the organization. Further, internal controls evaluate all levels of performance. These are addressed with five principles

Internal controls represent an organization’s processes and procedures used to meet its goals and objectives and serve as a defense in safeguarding assets and preventing and detecting errors, fraud, and abuse. Effective internal controls provide reasonable assurance that an organization’s objectives are achieved through (1) reliable financial reporting, (2) compliance with laws and regulations, and (3) effective and efficient operations. The passing of the Sarbanes-Oxley Act of 2002, as well as the numerous corporate frauds and bankruptcies over the past decade—including some

1. Internal control is a process designed to guarantee the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and ineffective and inefficient operations.

Have you ever heard the words internal locus of control? Do you what it means? An internal locus of control means that you believe you control the circumstance (Lamberton & Minor, 2014). I shall share an incident about a tragedy that occurred in my life in regards to what I believed was internal locus of control.

According to the PCAOB Standards, section AU 110.03 clearly states that management shall bear responsibility for all issued financial statements, the adoption of sound accounting policies, and for establishing and maintaining a system of internal controls that will record, track and process transactions, events and conditions. Management shall also maintain an understanding of all transactions made within the entity being audited. Due to this fact, management is also responsible for the fair presentation of financial statements in compliance with generally accepted accounting

The five interrelated elements of internal control draw from the way management operates the organization and integrates it with the management process. The elements of internal control include the control environment, risk assessment, control activities, information and communication, and monitoring. Discipline and structure is the foundation of internal control, in combination with integrity, ethical values, management way of thinking, operational style, and how the organization develops their staff; the control environments offer a firm composition of a control

Are sales of the following types controlled by the same procedures described below? Sales to employees, COD sales, disposals of property, cash sales, and scrap sales.

The control environment is what sets the tone for an organization and is the foundation for all other components of internal control. It provides discipline and structure and reflects the ethical values, integrity and competencies of the organization. The control environment is very important to effective internal control over financial reporting to an audit client like WorldCom, because good designs can prevent and detect frauds and errors. But because WorldCom had such a poor control environment, the company would require more testing for an audit. This shows that the board did not exercise oversight responsibilities over financial reporting or internal controls.

The internal controls were correctly monitored within the previous ninety days and have been reported on their findings. We must have a list of all deficiencies in the internal controls and information on any fraud that involves employees who are involved within the internal activities. The report must also include any major noteworthy changes in internal controls that could have a negative impact on the internal controls. (Barth, 2012)

“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.

Today, businesses rely mostly on technology. However, there are risks that business information systems face such as human input errors, transaction or data input that is unsuitably permitted prior to data input, and input controls that do not offer assurance that all transactions that are initially caught and recorded; these risks are all categorized as data origin risks. Business organizations combat this and other risks using General Controls and Application Controls. Please keep reading to find out what this controls are and how they are used, as well as learn about other risks that business face and their respective classes.

A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud

* Due to the unorthodox honor system of dealing with petty cash, any single employee can withdraw a substantial amount of petty cash in relative anonymity. This violates two Internal Control Principles: Physical Control and Establishment of Responsibility. It violates the Physical Control Principle because the petty cash is easily accessible with no form of physical protection of theft, and it violates the Establishment of Responsibility Principle because no single person is in charge of the Petty Cash Fund (rather everyone is). This can be remedied by assigning a custodian to be responsible for the fund, as well as creating a secure area to store said funds.