Question

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In your responses to your peers, critique their internal control proposals and provide constructive suggestions for improving them. What aspects or risks might they have overlooked? What would you suggest to make their proposals more effective and feasible?

There are several ways to prevent fraud. The first is ensuring employees are aware of all policies and capable of following them. I would also separate the roles between multiple employees. This makes it very hard for one person to commit fraud. There would have to be multiple employees involved. This would be less likely than a single person committing fraud. I would also require approval from a member of management for expenses. Another thing I would consider is storing assets in a secure area.

Answer 1

Internal Controls are vital to any size company. It is defined as a method for making sure that an organizations goals in finance are stated correctly, in compliance with laws, regulations and different policies and in general comprehends anything that might be a risk to a company.

No matter the size of the company, without proper written rules and plans any employee can deter from the correct way of doing things properly. I would want to make sure that there is a written form with the ethics, policies and procedures for the employees to look back on if they ever have any questions. Financial statements make accounting stream easier and is a way for the company to keep track of their expenses and revenue. In a small company of 25 people, many employees might be handling the financial statements. In the company I work for, with a little bit smaller of a group, we have around 12 people who all have access to diverse levels of the accounting system. One person might handle the inward invoices and put them in the system and have right to use to the business accounts to write those checks. In the case of a small group like the above example, having a set rules of what each person can access would be a great idea. I would interchange tasks and the duties of the personal to help them understand the level of accountability on each level. As well with making sure each employee knows what can be retrieved and what is not, I would suggest passwords on the different levels of accounting, and as well having a few people are who supervise checking the financials on random days. One person might have access one day however that could change within the coming days.

Management should always be there to double check work, and not just depend on on one employee to say that everything is OK. Faulty Management and omissions are one of the main reasons why fraud and theft can occur. In the company I work for, only the owners can sign checks, so if one of them isn’t there that day, no one gets paid. As vexing as that might be, this process eradicates too many people having access to the money and being able to sign checks whenever they want. My biggest goal in creating good internal controls with my company, would be to make sure that everyone feels like they can come to me when something needs fixed, when something doesn’t seem right, or even when things were done well. The open-door policy can help ensure that the employees feel like the are heard and can make a difference, no matter how small their tasks might be.