Wednesday, February 20, 2019
Internal Control Procedures
The internal go out system should be knowing to come upon and prevent fraud, errors and omissions, and material misstatements, but it can only provide credible assurance that the pecuniary statements ar free from material misstatements. The best designed internal condition system willing not prevent focal point override or collusion. The internal controls system is only as proficient as the management support behind the system this includes training employees and actively monitoring the controls. management should be investigated, explained and corrected as appropriate.Each of these internal. interior(a) control procedures argon the responsibility of management. Each control should be evaluated ground on risk and a cost/benefit summary. There are several effective low cost procedures that can be apply. These control procedures, when operating effectively, will provide reasonable assurance that mistakes will be either prevented or detected. Examples of controls that woul d have ensured that the prepaid adjustments were made would be to bundle up a check-list of recurring monthly journal entries, than as part of the fiscal statement review process, this check-list should be reviewed by management.At each financial statement date, each balance sheet account is reconciled this will ensure that each balance is supported. All reconciliations should be reviewed and approved by management. Finally at each financial statement date, flux analysis should be performed by comparing the actual results with both prior distributor point actual and the budget. All variances within a tolerance threshold defined by control procedures are manual processes, which can be implemented with proper staff training Symptoms of a lack of internal control include failure of management in exercising proper delinquent care and proper staff supervision.These symptoms can be identified by missing documentation and identified errors in the account balances and the lack of a comp any-wide ethics policy. (Herrera, 2010) Another symptom is that there is an identified lack of segregation of duties which means that staff members have access and are performing tasks that are in contradiction to the normal assigned duties. We identified that the adjusting entries for prepaid redress were not recorded for the first 3 months of the year. For the first three months, expenses were understate which means that net income was overstated, also current assets were also overstated.
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