Trolley Dodgers Case Essay examples

The case describes that, "...the accounting system could not be locked at the end of the month and there was no audit trail. Sachdeva and Mulvaney were thus able to make undetected post-closing changes to the books and bypass an internal control requiring Michael J. Koss to authorize those changes". These post-closing changes may be false entries done to hide theft during the accounting period. Further, because the reconciliations were done by the same people who initiated or recorded the transactions, the fraud could be covered up. For example, had one of them made an unauthorized purchase at a retail store where the expense were obviously not business related, they could have assigned the expense or expense description to a vendor where the transaction amount would have been normal. If the accounting system was not locked, they could have also just posted the transaction date back to a prior period that isn't likely to be reviewed.

The purpose of this report is to discuss the effectiveness of the internal procedures used to administrate the payroll function and provide information to other stakeholders

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.

Having internal controls is one thing, but how the company evaluates that control is a matter all by itself. Being an independent auditor, it is our job to understand an entity and

As mentioned a few weeks ago, were are commencing in the process to update each of the internal control narratives in preparation of the upcoming testing that tentatively scheduled to be conducting in May. Therefore, attached is the finalized Payroll Control narrative from 2015 to be reviewed. Could you please send some time over the next week or so reading through this narrative and recommend any necessary changes due to modifications of the present procedures. If you have any questions or concerns while reviewing this narrative, feel free to reach out to me. Thank you in advance for your help in ensuring a sound control environment and advancing the control testing efforts.

This shows a major breakdown in managerial controls that a low level employee was able to take steal money over the course of a couple of years without ever being suspected. This is a prime example of why internal controls are so vital and why even the government needs to be audited. Ruiz

Internal control is one of the integral parts of an organization. It is a system which controls different types of risks,

The outsourcing of payroll to the third party would be audited using the SAS 70 approach. SAS 70 audit “has become a virtual business requirement for service and outsourcing providers” (Gallun, 2008, p. 13). To have obtained a SAS 70 report the outsourced payroll provider would have gone through a rigorous review of their internal controls structures and once completed the compliance report can be shared to other users. The two main SAS 70 reports, which describe a company’s internal controls, are Type I which and Type II. Type I report does not perform a detailed testing of controls but only performs a “walkthrough” of controls (Hunton, 2004). Type II report is more involved than a Type I report because the controls are extensively reviewed (tested beyond a “walkthrough”) and tested over a minimum of six months.

There are several limitations which hinder the effectiveness of the internal controls; these limitations can result from lapses in the process and include system omissions, human factors, resource constraints or a lack of system flexibility. Effective internal control implies the organization generates reliable financial reporting and substantially complies with the laws and regulations that

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

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 are to be an integral part of any organization's financial and business policies and procedures. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Internal controls are simply good business practices (Strauss, 2003). And, since internal controls can have many more meanings in the world of accounting, the more we understand what were dealing with, the better we can analyze internal

1. There’s a potential risk of delegating one-person manipulating the recording and authorizing of the payroll accounts.

The personnel and payroll cycle includes the hiring of employees, recording hours worked, withholding and, recording of taxes, distributing payment for work performed, and properly documenting the termination of employees. Payroll can be a significant expense for a company and without proper internal controls can be vulnerable to fraud. Some common types of the fraud within the payroll cycle consist of ghost employees, claiming unworked hours, and pay rate alteration. The objective of a payroll audit is to determine if the current balances in the audit period are fairly stated and in accordance with accounting principles. According Arens, Elder, and Beasley, “Tests of controls and substantive tests of transactions procedures are the most important means of verifying account balances in the payroll and personnel cycle” (2012, p. 664). An

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