I’m studying and need help with a Accounting question to help me learn.
Companies lose millions of dollars each year through employee theft and fraud. To prevent this, internal controls are implemented. We will examine the types of controls companies use, and discuss what happens when these controls are missing.
Consider this scenario: You own a small business with 25 employees. In your initial post, explain which internal controls you would use to protect your assets and ensure that your financial statements are accurate.
In your responses to your peers, critique their internal control proposals and provide constructive suggestions for improving them. What aspects or risks might they have overlooked? What would you suggest to make their proposals more effective and feasible?
Peer Post 1: Considering the scenario that I own a small business, the first control that I would implement is the segregating of accounting duties. Within small businesses, there are instances where one person within the accounting department may have to wear more than one proverbial hat to ensure all aspects of the accounting process are up held. With segregating the duties within the accounting department, will allow more visible attention to detail. The second control that I would instill is, the restricting of access to any and all financial systems. By implementing a form of administrative controls, this will help reduce the chances of false entries and irregularities. The next control I would implement is increased oversight. Although the accounting representative or representatives are fully capable and trust worthy with entering data and completing balance sheets, I believe it is worth the time and effort for either myself and or another person, to diligently review the bank statements and reconciliations on a regular basis. The last control that I can think of that is very important, is having the financials statements reviewed by a third party person or group. This would help in identifying any inaccuracies or inconsistencies within the financial documents and help me better understand the financial data and how it can help or hurt the organization.
Peer Post 2: I will post it soon…..