Internal Controls Essay

749 Words Sep 27th, 2014 3 Pages
Week 5: Case Study 2 - Internal Control
Acct Fin: Managerial Use,Anlys

1. Inform the President of any new internal control requirements if the company decides to go public. (7 points)
Answer – Based on facts given in the case, new internal control requirements that are needed for the company to go public are listed below a. Compliance with Sarbanes-Oxley Act Regulations b. Compliance with SEC, GAAP and IFRS procedures to record all transactions c. Internal audit on company financial and business processes and transactions d. Implementation of better security measures for data protection, identity protection and ensuring that company resources are not misused

2. Advise the President of what the company is
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e. Advise the President of 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. (20 points)
Answer – Some of the things that the company is doing wrong and which should be changed are listed below followed by recommendations for improvement 1. Accountant doing both treasurer and controller job – It is recommended that there is separation of duties to ensure both roles are performed effectively 2. Lack of control on computer access and not having user authentication – It is recommended that IT section monitors all computers and user activities 3. Not having user ID and password – It is recommended that the company have user ID and separate password for every user 4. No blocking harmful or restricted websites – It is recommended that the company implement software that automatically blocks harmful or inappropriate sites thus ensuring that people are not able to visit these sites using the office computers 5. Petty cash handled by multiple parties – It is recommended that the cash handled by only one person, and is therefore accountable. Also all transactions (cash in particular) to be entered into a financial software 6. Employee with a criminal background recruited - Background checks to be performed for new hires
If these

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