Maintaining the integrity of these accounts is very important. Many companies today suffer a lot of loss from disgruntled employees, customers and competition with other companies. A number of companies have had to file bankruptcy with employees, investors and consumers suffering the most from the egregious and fraudulent activities. The effects of these companies’ mismanagement has been so troubling that congress passed legislation in 2002, called the Sarbanes-Oxley Act of 2002 (SOX); which requires public companies to have established internal controls and to have them published with the Securities Exchange Commission (SEC) (pg.132 Edmonds). This act is only a requirement for US publicly traded companies. However, private companies should
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The benefit to this is that this helps companies continue to operate in the event that employees get sick or are on vacation or simply decide to end their relationship with their employer. In addition, employees should be required to take any leave benefit provided by the company such as vacation time or sick days. Not only will this great for the employee to avoid burn out it is also great for the company as it reduces the opportunity for an employee to commit any type of deceitful activity. Lastly, it is important that verification of the employee’s performance is done. Not only is it important for employees to know that they are doing well at their jobs but also important for the company to know that their internal controls are effective. Bonded employees- This internal control is new to me. I was not aware that companies can obtain insurance on an individual to protect a company from any harm caused by a dishonest employee. I feel that this an essential safeguard to provide for upper level positions such as Chief Financial Officers.
Operation …show more content…
It details aspects of the company’s staff and operations. It also details from top to bottom the chain of command or authority plan and allows for employees to have accountability.
Prenumbered documents and physical controls-Out of all of the controls prenumbered documents and physical controls are the precautions that closely protect the companies’ accounts. Prenumbered documents could prevent any misuse of checks, it can help maintain inventory purchases and provide receipts to customers. Physical controls such as keeping inventory in a locked location with authorized access, keeping important documents in a safety deposit box or conducting unannounced reviews will deter any misappropriation or conceal any deceitful activity.
There are many internal controls that companies can do and these are a great way to minimize unethical behaviors and take the opportunity away from would be untrustworthy employees. However, it is not always fool proof. Sometimes employees can work together to do things against the company other times theft or illegal activity can come from outside the
The benefit to this is that this helps companies continue to operate in the event that employees get sick or are on vacation or simply decide to end their relationship with their employer. In addition, employees should be required to take any leave benefit provided by the company such as vacation time or sick days. Not only will this great for the employee to avoid burn out it is also great for the company as it reduces the opportunity for an employee to commit any type of deceitful activity. Lastly, it is important that verification of the employee’s performance is done. Not only is it important for employees to know that they are doing well at their jobs but also important for the company to know that their internal controls are effective. Bonded employees- This internal control is new to me. I was not aware that companies can obtain insurance on an individual to protect a company from any harm caused by a dishonest employee. I feel that this an essential safeguard to provide for upper level positions such as Chief Financial Officers.
Operation …show more content…
It details aspects of the company’s staff and operations. It also details from top to bottom the chain of command or authority plan and allows for employees to have accountability.
Prenumbered documents and physical controls-Out of all of the controls prenumbered documents and physical controls are the precautions that closely protect the companies’ accounts. Prenumbered documents could prevent any misuse of checks, it can help maintain inventory purchases and provide receipts to customers. Physical controls such as keeping inventory in a locked location with authorized access, keeping important documents in a safety deposit box or conducting unannounced reviews will deter any misappropriation or conceal any deceitful activity.
There are many internal controls that companies can do and these are a great way to minimize unethical behaviors and take the opportunity away from would be untrustworthy employees. However, it is not always fool proof. Sometimes employees can work together to do things against the company other times theft or illegal activity can come from outside the