• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Internal Control Case Study. Some of the important independent components of internal control system which an organization should have are:

Extracts from this document...

Introduction

Internal Control Case Study The content of this report is based on the methods adopted by an organization to preserve its assets, increase its operation efficiency and enhance reliability of accounting records and also to ensure that the organization is in accordance with the laws and regulations of that country. In other words assuring high standard of business & ethical practices permeate those activities which surround the organisation and optimally utilising its resources. Some of the important independent components of internal control system which an organization should have are: * Control operating environment * Risk assessment * Control Activities * Information systems & communication methods * Monitor performance In LJB case we can clearly see that the organization do not have an effective internal control system. If the company is thinking to go to public in near future it has to formulate a proper internal control system. The first and the most important component of an internal control system in an organization is leadership which comes in the control operating environment. ...read more.

Middle

LJB is violating the principle of segregation. The accountant who works as a controller and treasurer doing the company's maximum work right from purchasing, making payments doing bank reconciliation, recruiting etc. when one persons manages so many things the probability of making an error increases. Also, there can be various frauds and one may not be aware what went wrong. The three principles of internal control segregation are missing and we suggest that the company should implement these principles documentation, independent internal verification and recordkeeping from physical notebook. This will deliver a proper effective system of internal controls. Any attempt, error or fraudulent activity will be detected easily. Some of the Internal controls for cash receipts the company should include are: 1) Only one person should handle the cash may be appointing a cashier who maintains all the records and should be responsible for any error. 2) A proper recording of all the remittance advices, bank deposits etc. 3) Daily counts of receipts and daily comparisons of total receipts with total deposits Some of the internal controls for cash disbursement the company should include are: 1) ...read more.

Conclusion

An important principle of internal control is to give responsibility to specific trust worthy employees. Only One person should be given to control petty cash and keeping a log of it. At the end of the week or day the supervisor can reconcile it. A proper recording of inflows and outflows has to maintain by that employee. Human resource control activity also plays a vital role in internal control system. In the case we can see that the company has not done a background check for its employee before recruiting them. Through background check the company is not risking the company's security as well as information. A hired employee should be give a computer and a separate login id and password. This will help the company to track the employee's login timing and track their activities individually. The company should also have a strong web control policy which restricts them to visit inappropriate sites from work place; all these will help the company to formulate a proper human resource control and internal control of the firm. The company should include all the above mentioned point in order to have a sound internal control before they goes to public. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. Marked by a teacher

    Wace Burgess Case Study

    4 star(s)

    as M&S they will be happy to let Wace Burgess to take time in delivering their cards because that will in turn reduce costs. Dependability can help Wace Burgess improve of what customers think of them, it will be helpful for Wace Burgess to do things on time because M&S will judge them on this.

  2. Microsoft Case Study. Objectives, structure and marketing.

    have a low market share therefore they do not produce much cash which results in large amount of net cash consumption. A question mark has the potential to become the best product out of the portfolio and move onto a star.

  1. Proctor & Gamble, Inc. (Scope Case)

    Even though market research showed that this may not help users switch from the competition, they may still retain current users of Scope. This is why the old claims of "great tasting" and "bad-breath reducing" should also be kept, which is what made them market leaders in the first place.

  2. Unit 9: Marketing Strategy

    Celebrity chefs such as Jamie Oliver are constantly shown in the media, making healthy eating appear glamorous and fashionable. Government guidelines will also have an affect on the buying habits of families as school enforce a "healthy packed lunch" policy, banning foods with excessive sugar and fat.

  1. Case study of the Unilever Company

    operations in more of 100 countries, and unilever products are sold in over 50 countries more. With consumers, customers, suppliers and shareholders in all the continents, this company described itself as a multi-local multinational and an important part of local communities in every country Unilever operates. Globalization effects on Unilever.

  2. I will be identifying the legal criteria for offer and acceptance in a valid ...

    Neither Bobby or Catherine can sue Angus for anything, as he wasn?t legally bound by contract to either of them, and they didn?t meet the conditions of his offer so he had every right to reject working with them. Daniel however can sue Angus for his money and the breach

  1. LEGO's Management Accounting Decision

    to assist it to meet the global challenges in product markets, and to allow management accountants to focus on the firm?s value-added relative to competitors. There are two key themes captured in this paper. The first theme, is that products are desired for the attributes that they provide (Lancaster, 1979),

  2. Galvor Case. Planning and control system for Galvor as a part of an ...

    More importantly, control should be shared throughout functional areas rather than monopolized by finance. In addition there should be a qualitative balance between trust and control. 3. Planning and control system for Galvor as a part of an MNC Universal Electric: From UE’s viewpoint, Galvor was a subsidiary of its multinational structure.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work