Topic 2 post review minimum of 150 words
clinton
As a manager, I should have clear understanding of internal controls. Internal controls promote efficiency and effectiveness. Internal controls over assets promotes whether the cash is adequate, and manageable. (While efficiency refers to how well something is done, effectiveness refers to how useful something is). A lack of effective internal controls over financial reporting could result in the inability to report our financial results accurately, which could lead to a loss of investor confidence in our financial reports, and have an adverse effect on our stock price.
A weak internal control over cash or even inventory handling may result in fraud or other criminal activities. Millions of dollars are lost every day in businesses due to fraudulent activities. As a manager I would take the time to explain to my manager that yes, it’s great that you trust your employees, but don’t let them run the store, you run the store. Control the environment being an accountant of ABC Inc.; I would try to resolve the situation as follows:
3.) Create a Risk Analysis. Review the possible opportunities for things to go wrong, and how can they be corrected. (In other words, review what ifs.)
4.) Correct errors promptly. Failure to take corrective action to errors or mistakes can lead to possible criminal acts.
5.) Create logs of the documentation. Record the transactions of cash: Are all records of cash transactions properly recorded, with accuracy against the receipts, the invoices, the accounts payable, the accounts receivable, revenue, and expenses. Completeness: Are all transactions and accounts that should be included in the financial statements actually included?
4. Create a Trial Balance on a Daily or Weekly Basis. With a trial balance, this guarantees the accuracy, valuation, and allocation of money — Are cash transactions valued appropriately? Are opening cash accounts included in the financial statements at appropriate amounts, and any resulting valuation or allocation adjustments recorded appropriately? Cash flow statements must be maintained on a regular basis.
5. Reconciliation: Are the bank reconciliations performed on a consistent basis. With a bank reconciliation this guarantees no mistakes have been made by either the bank or the company, and if so the opportunity to quickly correct the mistakes.
6. Create an Authoritative or Managerial Figure. Cash payment should be pre-authorized. Requiring specific managers to authorize certain types of transactions provides a level of responsibility to the accounting records, by providing documentation that the transactions have been seen, analyzed, and approved by appropriate authorities.
Reference:
Ingram. D. (2017). What Are the Seven Internal Control Procedures in Accounting? Retrieved from:http://smallbusiness.chron.com/seven-internal-control-procedures-accounting-76070.html
Sproat A. (2016). Segregation of Duties: The Key to Proper Controls and Minimizing Fraud Retrieved from: http:// Ten Things to Strengthen Internal Controls in the Office. Retrieved from: https:// 624
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