Y’Lonn James
Yolanda Serrano
ACCT504-10563
Case Study #2
02/05/2016

Situation a.
Missing Internal Controls:
Monitoring control is the missing internal control weakness. This monitoring provides “eyes and ears”, so that no one person or group of persons can process a transaction completely without being seen and checked by another person or group. This control involves understanding how companies monitors its control and how effective the monitoring is. The clerk should not be the only person who maintains the entire inventory.

Segregation of duties is also missing. Segregation of duties is one of the steps that decrease the likelihood of theft. Segregation of duties prevents a breakdown in a key element of controls, such as improper segregation of duties and/or improper access to assets. Or it might result from a weak control environment. In the absence of the segregation of duties, the clerk has opportunity to steal.

Problems:
Can record inaccurate information since nobody is there to double check
Theft

Solution:
Put a supervisor in place to for oversight until the cashier is adequate.
Implement check and balances by preventing one person from processing transactions.

Situation b.

Missing Internal Controls:
Adequate records, bookkeeping, and Authorization: Nicole is a part of a successful growing business, but does not book keep and provide any reports for the sales team.

Problem:
Not being able to accurately account for what is being spent
Unable to report to the government any expenses
Records cannot be seen since the sales persons are using their own credit cards

Solutions:
Implement proper record and bookkeeping activities by making sales associates provide receipts for all expenses or provide company credit cards. In either case a reimbursement policy or credit card, policy with guidelines to account purchases associated with travel.

Situation c.
Missing internal control:
Control Environment. New employees should have standard operating procedures , guideline or practices when deciding how to handling employee issues .

Problems:
Higher risk and exposure for the company it from former employees who felt their cases were not handled correctly.

Noncompliance with local, state, and federal laws

Solution:
Written instructions as to how to follow up when dealing with employee issues such as hiring, firing, sexual harassment, and ethical infractions.

New hires need to be trained and need to be follow up by a superior with performance evaluations.

Regularly scheduled training should be implemented for all employees. This protects the company to an extent by properly training employees.