Case Study 2
ACCT-504-61405
Situation A: -
In evaluating the internal control over inventory for the Williams Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work.
Missing Internal Control characteristics for William Oil Services: -
In the William’s case oil Services Company, The missing internal control characteristic is Monitoring Control, The clerk is the only person who has to maintain all the inventory related records.
Possible Problem: -
In this company, the clerk is the person who can handle all the activities of accounts and responsible for Inventory and there is no other staff to monitor or supervise or double check accounting documents which are prepared by the clerk.
Solution for the Problem: -
The solution for the internal control weakness over Inventory for the Williams Oil Services company is as follows:
- Employee or a group should be prohibiting from processing a transaction completely.
-all programs controls by computerized system …show more content…
This thing happens because of the attitude, awareness, and actions of the board of directors, management, and owners who influence the control consciousness of its employees.
Solution for the Problem:
The solution for the internal control weakness of this situation is to follow the Control Environment component of internal control. This is explained below:
-Tone at the top: Starts with owner(s) and top managers ethics
-Key ingredient: ethics of corporate code
-Control Environment: It simply means controlled environment of the entity in which -operations of the business are carried out. That’s the control environment that keeps anyone in the entity from committing any wrong doing. To justify my claim, if management is honest and encourages honesty and is strict towards falsehood than employees would expect harsh consequences and only this will stop the employees to commit any fraud individually or in collusion with others.
References: -Class 4 Presentation,
ACCT-504-61405
Situation A: -
In evaluating the internal control over inventory for the Williams Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work.
Missing Internal Control characteristics for William Oil Services: -
In the William’s case oil Services Company, The missing internal control characteristic is Monitoring Control, The clerk is the only person who has to maintain all the inventory related records.
Possible Problem: -
In this company, the clerk is the person who can handle all the activities of accounts and responsible for Inventory and there is no other staff to monitor or supervise or double check accounting documents which are prepared by the clerk.
Solution for the Problem: -
The solution for the internal control weakness over Inventory for the Williams Oil Services company is as follows:
- Employee or a group should be prohibiting from processing a transaction completely.
-all programs controls by computerized system …show more content…
This thing happens because of the attitude, awareness, and actions of the board of directors, management, and owners who influence the control consciousness of its employees.
Solution for the Problem:
The solution for the internal control weakness of this situation is to follow the Control Environment component of internal control. This is explained below:
-Tone at the top: Starts with owner(s) and top managers ethics
-Key ingredient: ethics of corporate code
-Control Environment: It simply means controlled environment of the entity in which -operations of the business are carried out. That’s the control environment that keeps anyone in the entity from committing any wrong doing. To justify my claim, if management is honest and encourages honesty and is strict towards falsehood than employees would expect harsh consequences and only this will stop the employees to commit any fraud individually or in collusion with others.
References: -Class 4 Presentation,