...Internal control, internal audit and risk management Internal control is under the Board of Director's responsibility. Internal control's function is, among other things, to ensure the efficiency and profitability of operations, the reliability of information, and adhering to rules and regulations. Internal control is a part of day-to-day management and company administration. An essential part of internal control is the Internal Audit, which operates as a separate unit under the CEO and reports its observations to the Board of Directors. The Internal Audit supports the Group's/ Company’s management in directing operations by inspecting and evaluating the efficiency of business operations, risk management and internal control, and by producing information and recommendations to enhance efficiency. The Internal Audit also inspects the processes of business operations and financial reporting. Internal Audit's directive have to be approved by the Group’s / Company’s Board of Directors. The operations of the Internal Audit are guided by being risk-focused and emphasizing the development of business operations. Risk management The goal of risk management is to secure the Group's / Company’s earnings development and to ensure that the Group/Company operates without any disturbances by controlling risks in a cost efficient and systematic manner in all divisions/departments. The Board of Directors must approve the Group’s / company's risk management principles, which concern...
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...Unit 2 Business resources P4 What is financial resources? Companies often need finance for starting or continuing business operations. Small businesses typically need start-up finance, while medium and larger companies may need finance to expand operations. Different types of financial resources are usually available based on the company’s size and needs. Each financial resource offers different advantages or disadvantages to companies. Financial resources are the money that are available to a business for spending in the form of cash, liquid securities and credit lines. Before going into business, an entrepreneur needs to secure sufficient financial resources in order to be able to operate efficiently and sufficiently well to promote success. Short definition of internal and external finance. To provide internal and external finance means to engage in business activities using either monies from within a company or funds from outside. This is the key and most important difference between these two funding options. When a company uses internal finance, it takes advantage of existing supplies of capital from profits and other sources. External finance involves the use of money new to the company, from outside sources, to fund planned activities. Consequence of not managing your financial finance. By not managing your financial resources things can go wrong quickly for your company. Your company will be at risk and I’m speaking about financial risk. Financial risks are...
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...Audit in Latvia Latvia has created a decentralised internal audit system, i.e. own internal audit system is established within each ministry, directly subordinated to the head of the institution and directly reporting him on the audit results. To ensure appropriate work of the internal audit units, the Government of Latvia approved the Regulations Nr. 342 "On the Internal Audit" on 5 October, 1999, that stipulate the obligations and tasks of internal audit units and heads of institutions in the field of internal auditing and internal control system. To facilitate the independence of the internal audit, the Internal Auditing Council was established in accordance with the Cabinet of Ministers' regulations Nr. 346 "Statutes of the Internal Audit Council" approved on 5 October, 1999. The members of the Council were appointed on 9 August 2000 by the Cabinet of Ministers (Decree Nr. 401). The Council consists of five members, including representatives from the state institutions, public organisations, scientific and vocational educational institutions as well as business associations possessing knowledge and experience in the field of internal audit. The Internal Audit Council is a co-ordinating institution. Its aim is to co-ordinate the implementation of the internal audit system and the unified state policy in order to improve and make more efficient and rational the operation of the public administration institutions. In accordance with the recommendations of DG-AUDIT...
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...Controls for Outflows Improper recording of costs and expenses are common errors in financial statements. Fraud is common in payroll, accounts payable, and cash disbursements. Errors and fraud can be prevented when controls for outflows in purchasing, accounts payable, cash disbursements, finance, investments, and payroll are performed. This proposal recommends and explains the controls in detail and describes the importance of the controls for each area. Purchasing: Purchases are requested by people who know what the organization needs. Purchasing is a vital component in any business. With internal controls in effect potential risk or fraud will be reduced. Companies that do not have adequate internal controls in place are in danger for opportunities for fraud, theft, and misuse. The recommendations for internal controls that relate to purchasing will follow. Separation of duties assigns functions to different people. No one person has complete control over all buying activities with proper segregation. The best practice is to have different people approve purchase, receive materials, approve invoices for payment, review and reconcile financial records, and to perform inventory counts. Consequences for not separation of duties are: * Unauthorized or unnecessary purchases made * Improper charges made to department budgets * Excessive costs incurred * Goods purchased for personal use (Internal Control Practices: Purchasing, 2009). Accountability, authorization...
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...accidents or natural disasters. The difficulties in obtaining these funds constitute one of the major challenges in running a business. The two major sources of business finance are internal and external funding. This paper examines the differences between internal and external sources of finance. It will also examine the advantages and disadvantages of each source. Internal sources of Finance Internal source of finance refers to funding generated within the business as opposed to financing obtained from outside sources. Internal funding can be obtained from retained earnings, sale of assets, depreciation, reduction or control of capital. Retained earnings: These are profits left over after a firm has settled its debts and paid out dividends to shareholders. The leftover funds can then be ploughed back into the business. The advantage of this method is that there is no borrowing cost associated with it. The firm has total control over the decision to use the funds and is not subjected to any vetting by lenders. The disadvantage of using retained profits as a source of funding is that the company may not have cash readily available in times of urgent need (Timimi, 2010). Sale of asset: The sale of assets is another source of internal financing. A business may choose to sell some of its assets to generate cash to finance its business needs. These assets could be in the form of patents, real estate, art work, equipment, or machinery. Although this strategy may work in the short...
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...TASK 4 (Discussion Task) “INTERNAL CONTROL ANALYSIS 1” Main Problem : Explain how the principle of separation of duties is violated in each the following situations. Also suggest one or more procedure to reduce risk, and exposure highlighted in each of example. Analyzed the problems : * How the principle of separation of duties can be an internal control system ? * How to make a good principle of separation of duties ? * What is the best internal control design for the job authorities ? * How to reduce risks in posting the receipt to the customer account ? Learning objectives : * Identify the exposure to risk that a firm faces with respecting of asset and data, including the fraud. * Understand how to reduce risk and exposure the highlighted in every situation. * Recognize how the separation of duties become a part of internal control system. * Understand about the risk exposure to business and the importance of internal control to minimize the risk. Solution a. A payroll clerk recorded 40-hour workweek for an employee who had quit the previous week. He then prepared a paycheck for this employee, forged her signature, and cashed the check. Violation: The payroll clerk only have an authority to prepare the paycheck, not to signature or cashed the checks. The signature of payroll is the duty of HR manager, while cashed the paychecks is the duties of the cashier, so, the payroll clerk has violated his/her job description and his/her authorities...
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...Academia.edu Log InSign Up We're trying Google Ads to subsidize server costs. If you are logged in, you won't see ads. Hover to learn more. pdf An Evaluation of the Effectiveness of Public Financial Management Syste… 8 Pages An Evaluation of the Effectiveness of Public Financial Management System being used by Government Departments in Zimbabwe. (2000 – 2011) Uploaded by Donnelie Muzividzi Files 1 of 2 Views 3,402 connect to download READ PAPER Academia.edu An Evaluation of the Effectiveness of Public Financial Management System being used by Government Departments in Zimbabwe. (2000 – 2011) Download Research Journal of Finance and Accountingwww.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)Vol.4, No.4, 201320exodus from the public sector and from Zimbabwe impacted negatively on the effectiveness of PFMS andaccountability systems, threatening day to day operations from the reform.Some human resources existed but not adequate in numbers and quality to perform some critical functions andoptimal utilization largely due to lack of working facilities.The shortfall has been found to have two dimensions: the technical dimension and the governance dimension. Onthe technical dimension, the effectiveness of the PFMS has been reduced due to failure to maintain the systemand inability to cope with number of digits due to hyper inflation. On the governance dimension, some existingregulations and procedures were not followed...
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...PUBLIC FINANCIAL MANAGEMENT AND CONTROL LAW FIRST PART General Provisions FIRST SECTION Purpose, Scope and Definitions Purpose Article 1- The purpose of this Law is to regulate the structure and functioning of the public financial management, the preparation and implementation of the public budgets, the accounting and reporting of all financial transactions, and financial control in line with the politics and objectives covered in the development plans and programs, in order to ensure accountability, transparency and the effective, economic and efficient collection and utilization of public resources. Scope Article 2- This Law covers the financial management and control of public administrations within the scope of general government, encompassing public administrations within the scope of central government, social security institutions, and local administrations. Without prejudice to the provisions of international agreements, the utilization and control of European Union funds and domestic and foreign resources allocated to public administrations shall be subject to the provisions of this Law. (Amendment: 22.12.2005 - 5436/10-b art.) Regulatory and supervisory agencies are subject only to the Articles 3, 7, 8, 12, 15, 17, 18, 19, 25, 42, 43, 44, 47, 48, 49, 50, 51, 52, 53, 54, 68 and 76, 78 of this Law. Definitions Article 3- Particularly, in the enforcement of this Law; a) Public administrations within the scope...
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...TABLE OF CONTENTS - CHAPTER 3 I. CHAPTER 3 – RESPONSIBILITIES OF FINANCIAL MANAGEMENT 2 II. PERTINENT POLICIES 2 III. INTERNAL CONTROL 2 A. Overview of Internal Control 3 B. On-the-Job Application of Internal Controls 4 1. Records Management 4 2. Source Documents: Organization and Filing 5 3. Develop Departmental Procedures for Each Financial Process 7 4. Detailed Procedures for Cash Handling 10 5. Perform a Series of Daily, Weekly, Monthly, and Quarterly Tasks 10 6. Provide Regular Reporting to Management 14 7. Know Pertinent Campus Policies, Procedures, Regulations and Resources 14 CHAPTER 3 – RESPONSIBILITIES OF FINANCIAL MANAGEMENT The purpose of this chapter of The Guide is to provide information about administering departmental finances. This section notes significant policies and procedures, provides an overview of internal control, gives suggestions for getting organized and ready to work, and provides a checklist of periodic tasks to complete. PERTINENT POLICIES As noted in Chapter 2 of The Guide, departmental financial management must be done in accordance with University of Colorado and Boulder campus policies. The following three policies are of critical importance: ▪ Fiscal Roles and Responsibilities ▪ Program Management and Fiscal Control Responsibility ▪ Fiscal Code of Ethics The Fiscal Roles and Responsibilities Policy establishes the...
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...There are many advantages as well as disadvantages, and you must be well prepared and informed of both in order to deal with these issues. From the information which was conveyed to me, I feel you would prosper greatly by making many important changes and decisions before doing so. I have conferred with a business partner in order to make crucial, necessary and appropriate internal control requirements which will be viable to your company. As you may know, there are mandatory compliances that have to be met by every company (corporation) all across the nation. These compliances, recommendations and requirements are essential for the effectiveness and efficiency of the company. These laws are implemented not only to help you manage the finances of the business, but also to keep up with the liabilities and expenses. I will begin by informing you of the internal control requirements that will allow you to safeguard your financial assets that will come under public scrutiny once you go public. Being a part of the accounting profession, I feel it is my obligation to inform you of the essential internal control requirements that you must implement within your company and uphold at all times. 1. It is the utmost importance for all companies to maintain adequate and accurate financial statements and accounting records within that financial year. These records help to safeguard your assets, increase the efficiency of the company, ensure that the company complies with all laws and regulations...
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...Internal Controls Internal controls are a necessary part of any company. They are comprised of all the methods and measures used by a company to one of two things. (Wetland, Kieso, & Kimmel, 2003,) They either safeguard a companies assets from things such as theft or unauthorized use, or they help to enhance the accuracy and dependability of a companies accounts and records. This second use helps to ensure that fewer errors are made wither intentional or unintentional. Without internal controls, there would be a lot of room for mistakes that could potentially destroy a company. For example, accounts could be stolen from and manipulated or a simple calculation could be missed, upsetting the entire balance of the accounts. These internal controls help to ensure that these things do not happen. In 2002, congress passed the Sarbanes-Oxley act due to the rising amount of corporate scandals in the previous years. This act is often said to be one of the most important acts passed in decades because it allows companies to focus more on internal controls and give them more attention. The act is often calls SOX for short and it puts more pressure on the executives and directors to ensure that their internal controls are reliable and are working to the best of their ability. The act requires companies to have internal controls specifically for financial accounting including auditors and frequent assessments. This act also established the Public Company Accounting Oversight Board or...
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...The IUCN Anti-Fraud Policy February 2008 – Version 1.0 Office of the Director General The World Conservation Union Rue Mauverney 28 1196 Gland, Switzerland Tel: +41 22 999 0296 Fax: +41 22 999 0029 www.iucn.org Policy Version Control and Document History: The IUCN Anti-Fraud Policy Title Version Source language Published in French under the title Published in Spanish under the title Responsible Unit Developed by Subject (Taxonomy) Date approved Approved by Applicable to Purpose IUCN Anti – Fraud Policy 1.0 released February 2008 English Politique de l’UICN de lutte contre la fraude Política para la Prevención de Fraudes de la UICN Office of the Director General IUCN Oversight Unit Fraud, Internal Control, Risk Management November 2007 Director General and Global Management Team All IUCN Staff Members world-wide The aim of the IUCN Anti-Fraud Policy is to safeguard the reputation and financial viability of IUCN through improved management of fraud risk. It sets out explicit steps to be taken in response to reported or suspected fraud, as well as measures that will be taken to prevent or minimize the risk of fraud. IUCN Internal Control Policy Framework COSO Standards IUCN Code of Conduct and Professional Ethics for the Secretariat Sent to all staff members world-wide, available on the IUCN Knowledge Network (intranet), provided for information to all partner organizations and suppliers with contracts with IUCN, and available publicly on request. Is part of Conforms...
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...MEMO To: CEO From: Accounting Manager Date: February 19, 2013 Re: Need for internal managerial accountant Dear Chief Executive Officer, This is a memo that will state the reasons why and benefits of hiring another managerial accountant. As we all know, the significance of a trustworthy accounting department is essential in any business. Accounting is specifically the most important department of a business for the simple fact that it deals with the company’s money statuses. This includes where a business can and can’t go financially and what it has and has not accomplished in terms of financial objectives. It is essential that a business have a strong internal accounting system because it can mean monetary success or failure. An internal accounting system includes the maintenance of the company’s finances in terms of short as well as long-term goals, strategy formulation for revenue, operational direction and control of the company’s finances, and the organization of resources and assets aligned with the desired budget within the company. All of these duties will be separated and given specifically to the new internal accounting manager. It is desired that a position be made specifically for these duties because of the importance in the company’s finances. One can not get too overwhelmed with other aspects and/or factors within the company to make mistakes or over or under budget the company. There should be a main focus so there are no unanalyzed risks involved. (Wild and...
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...stock price has ranged from $8 in July 2002, to its peak at $15 in July 2006 to its low at $4 in July 2010. The Chief Executive Officer (CEO), Michael J. Koss (MJK), the founder’s son, and his family directly or indirectly own in excess of 70 percent of the company’s 851,000 shares. A $34 million embezzlement of cash from the KOSS occurred over a 12-year period from 1997 through December 2009. QUESTIONS AND ANSWERS 1. What is the problem in the Koss Corporation case? This case evolves about a wide-ranging fraud committed by senior members of the accounting department of Koss Corporation. Over a period of years, Sachdeva, the Principal Accounting Officer, Secretary and Vice-President of Finance at Koss had stole over $30 million from the Company. Sachdeva used the embezzled funds to finance her extravagant lifestyle and for her personal spendings. Mulvaney, working in concert with Sachdeva, prepared false journal entries to disguise Sachdeva's misappropriation of funds. Sachdeva and Mulvaney attempted to hide the embezzlement in the Company's financial statements by overstating assets, expenses, and cost of sales, and by understating liabilities and sales. Over the last 12 years, Koss never realised the embezzlement made by the culprit. The embezzlement was revealed on December 18, 2009, when American Express (principal bank for Koss Corporation) notified the Company that funds were being wired from a Company bank account to pay for expenses on Sachdeva's personal credit card...
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...Controls for Outflows Learning Team A ACC/544 June 29, 2015 La Ron Roach Controls for Outflows Misstated expenses and costs have been listed as common reasons for financial statement restatements according to a report issued by the Government Accountability Office (Louwers et al, 2007). The improper recording of costs and expenses are due to errors as well as fraud. To prevent errors and fraud, proper controls for outflows should be performed. This proposal seeks to provide recommendations and explanations of controls in the areas of purchasing, accounts payable, cash disbursements, finance, investment, and payroll. Purchasing Purchases are made based on an organization’s needs and are therefore a key component in business. The following internal control practices can help to alleviate risk and reduce fraud: • Segregation of duties • Accountability through authorizations and approvals • Security of assets • Review and reconciliation Segregations of duties can be implemented by assigning related purchasing functions to different people. This ensures that no person has complete control over all buying functions. The safest practice is to have different employees to approve purchases and receive goods that have been ordered. Also, different people should approve invoice payments, conduct inventory counts, and perform a financial records review. Without this separation, the potential for theft and fraud increases...
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