Internal Control

Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine. When your advice the President, please be sure to reference the applicable internal control principle that applies. From the passage that the accountant has recently started using presumed invoices following by the principle of internet control activities.

Please find the Documentation Procedures passage below. From the passage, the president wants to buy an indelible ink machine to print heir checks.

In my opinion, I would like to recommend that he should buy an indelible ink machine following by the principle of internal control activities. Please find the Physical Controls passage below. Principles of internal control activities Documentation Procedures Companies should establish procures for documents. First, whenever possible, companies should use presumed documents, and all documents should be account for.

Premiering helps to prevent a transaction from being recorded more than once, or conversely, from not bring recorded at all.

Second, the control system hon. that employees should promptly forward source documents for accounting entries to the accounting entries to the accounting department. This control measure helps to ensure timely recording of the transaction and contributes directly to the accuracy and reliability of the accounting record. Require use presumed checks and account for them in sequence; each check must have an approved invoice; require employees to use corporate credit cards for reimbursable expenses; stamp Invoices “paid”.

Physical Controls Store blank checks in safes, with limited access; print check amounts by machine in Indelible ink. Advise the President to what the company is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal control principle that is being violated along with a recommendation for improvement. Following from the passage that they have one accountant who serves as Treasurer and Controller which streamlines many of their processes.

In this dual role, he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank recommendation.

The accountant is so busy that the company handles pretty cash a bit differently. He should assign duties to more than one person not only one because it hard for one person to control and serves as treasurer and controller in the same time. Following by Principles of internal control activities. Please find Segregation of Duties and Establishment of Responsibility passage below.

From the following passage that all employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. In my opinion, he should limit access to the petty cash in a desk drawer, only one person could have responsible for the petty cash.

Following by Principles of internal control activities. Please see the Establishment of Responsibility passage below. Segregation of Duties Different individuals approve and make payments; check singers do not record disbursements Segregation of duties is indispensable in an internal control system.

There are two common applications of this principle: 1 . Different individuals should be responsible for related activities. 2.

The responsibility for record-keeping for an asset should be separate from the physical custody of that asset. Rhea rational for segregation of duties is this: The work of one employee should, Introit a duplication of effort, provide a reliable basis for evaluating the work of another employee. Segregation of related activities making one individual responsible for related activities increases the potential for errors and irregularities.

Establishment of Responsibility An essential principle of international control is to assign responsibility to specific employees. Control is most effective when only one person is responsible for given task. Establishing responsibility often requires limiting access only to authorized personnel, and then identifying those personnel.

Only designated personnel are authorized to sign checks (treasurer) and approve vendors. Compare checks to Invoices; reconcile bank statement monthly