Internal Controls Protect Businesses Essay

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.

Internal control has different control principles, establishing responsibility focuses on allotting different tasks to a concerned person, like each sales person should have an individual sales register. Different controls on physical, mechanical and electronic should be exercised as this will help in reducing the unauthorized use of different resources, this is essential for safeguarding assets and

So what are internal controls? And why are they so important? Internal controls describe the policies, plans, and procedures

When an employee reaches a level of trust with their company and the controls of that company is weak, the employee may assume this is an opportunity to commit the crime and avoid detection.

Answer 2: Measures companies can take to protect themselves from the action of rogue employees:

At the same time, there must be a strategy that will educate executives on how to protect their personal information. This will be accomplished using a workshop that will teach them about the warning signs of fraud and specific strategies to safeguard against it. For example, if there is someone trying to steal an executive's identity. The monitoring services will serve, as the first line of defense to immediately prevent the fraud before it occurs. To reduce the chances of this person becoming a target in the future, the prevention strategies will limit access to any kind of personal information. Over the long term, the combination of these two factors will control how the information is used and monitored. (Biegelman, 2009, pp. 295 312)

The second preventive method Daniel's touches on is still based on background, but this one is more like continuing process. People change sometimes, the same employee that was hired a year ago might not be the same employee a year later. A person behavior don't always remain constant and no one knows really knows what an employees might be involved in outside of work. Thus, firms should perform a background check when promoted within, especially when employees play a bigger role than they used. The third and final preventive method Daniel talks about is audit. As mentioned in the case, management and board members are often more trusting. Most of financial fraud that firms encountered are cause by board members and upper level management, such as the infamous case that occurred in 2001 Dennis Kozlowski, the former CEO of Tyco International Ltd., and former Tyco finance chief Mark Swartz “were sentenced up to 25 years in prison for stealing hundreds of millions of dollars from the company.” After the infamous Enron and WorldCom scandal, all publicly traded company are required to audit by an independent auditor and issue their financial statement well. All of the three methods Daniel provided

Fraudulent acts by individuals can negatively impact the company’s reputation and incur significant legal costs, and lead to incarceration, not to mention the downfall of the entire organization.

1. In my opinion, non-shareable financial need is the most important in causing executives, managers, and employees to commit occupational fraud. The proxies become “criminals on trust” in the case of they start to have financial difficulties, which they cannot share with nobody. They think that available option to perform completely secret financial fraud and able to give an explanation to their behavior in a given situation, allowing to reconcile presenting itself as an reproof trust the people and how user entrusted funds or property.

internal controls are controls or safeguards that a business puts into practice to assure that fraud and crime won’t take place within their business. examples of internal controls are having management confirm transactions, or having login code for individual employees who access important data. No internal controls plan is flawless and the bigger their are the more expensive and time consuming they are. But, internal controls are vital for the success of a business; they should be tested and improved regularly.

Internal controls, as defined by Investopedia.com, are “methods put in place by a company to ensure the integrity of financial and accounting information, meet operational and profitability targets, and transmit management policies throughout the organization.” This system works best when applied to multiple divisions and deal with inter-departmental transactions. An example of the latter may be those occurring between the originating department from where the transaction is originated, supply management, and accounts payable. These methods can be broken down between a preventative and a detective category. Preventive controls are just such: those policies and procedures that prevent an incident from occurring.

“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.

Internal control is defined as a process affected by an organization 's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization 's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization 's

Use of the three principles of internal control segregation of record-keeping from physical custody, documentation and independent internal verification is recommended. This will deliver an effective system of internal controls. Any attempt at fraudulent activity will be detected unless there is collusion among the employees.

Most importantly a company should protect their assets, specifically their credit cards and bank accounts. Credit cards and bank accounts is a common source of fraud and should be recognized as the most important advice to adhere to (Beesley, 2013, para. 5).Professionals recommend “separating your personal banking and credit cards from your business accounts – this will ensure fraudsters don’t get their hands on all your money. This will also make it easier to track your business expenses and report deductions on your tax return” (Beesley, 2013, para. 5). It is also recommended that credit cards are not shared with employees within the company. There are many advancements in technology that allow for reduced use of having to tote around an actual credit card, for example, bills can be paid in advance online (Beesley, 2013, para. 6). Along with online bill pay, e-statements have also