Design a Proposal for Appropriate Controls to Cover Cash, Sales, Accounts Receivable, Inventory, and Production.
November 12, 2012
Controls for Outflows
Small, midsized, and large businesses need effective controls to ensure that the business has the lowest risk rate possible. The lower the risk, the less likely that fraud would occur. In this analysis, Learning Team B will provide a proposal for appropriate controls to cover cash, sales, accounts receivable, inventory, and production. The team will discuss some prevention techniques to reduce these risks and make recommendations in areas that will help controls within the organization.
Internal controls for cash is essential to ensure that transactions are properly recorded, fraud risk is managed, and management have given the proper …show more content…
Segregate the duties of purchasing department, inventory receivers and shippers, sales department, accounts payable, and accounts receivable.
Determine authority levels for various authorizations of transactions.
Physically count inventory quarterly, semi-annually, annually or on a particular cycle. Compare counts to amounts in general ledger. Investigate all discrepancies.
Count and inspect all inventory received before recording it received.
Periodically trace a piece of inventory through the entire process, from purchasing to receipt of payment for shipped product.
Book any scrap or damaged product that cannot be used. Periodically review records of obsolete inventory and determine if it can be sold or scrapped.
Safeguard all inventories. Identify all inventories with tags, organize inventory for ease of locating, and keep it locked up. Only authorized employees should be allowed in designated areas.
Every level of employee has some