Question

Hi , I have a question. Thank You

If you owned a hardware store that employed staff who were responsible for receiving merchandise, stocking shelves, and handling sales, what two internal controls would you implement and why.

Answer 1

Internal controls are such extra controls that are applied in an organisation/business to ensure that there are no losses to business assets and there is no such issues in the functioning of the business. Internal control segregates the duties and insurance that no single person can have access to whole business documentations and physical assets.

Internal controls are of many types. These includes physical security barriers, access restrictions, biometrics, locks, surveillance equipments etc.

The two types of internal controls that can be implemented are as follows :-

• To ensure the inventory control of the merchandise stock regular physical inventory count should be carried out. This will ensure that the actual physical stock is with the booked stock in the books of accounts. Employees monitoring should also be considered while implementing this control. Also proper books of account should ve maintained to ensure that material is actually received or sent for sale.
• For handling sales, employees in the sales department are only allowed to ask for units required for sale and proper paperwork should also be involved for acquisition of material/ products ready for sale.

The above mentioned internal controls will help in tracking the sales and actual stock after sales.

These internal controls can be implemented if anyone owned a hardware store.