Essay on Kudler Internal Control and Risk Evaluation
Internal controls are essential for a company to maintain the security of its property as well as the integrity of sensitive and confidential information. Should Kudler decide to implement and utilize industry-specific software, it would need to evaluate the internal controls and risks associated with these four systems: payroll, accounts payable, accounts receivable, and inventory. Currently, Kudler does not have effective controls in place to minimize security risks and protect its data. The following brief will evaluate the application of internal controls to new accounting system by first analyzing Kudler’s current internal controls, and then recommending steps the company can take in …show more content…
Kudler has noted that the inventory tracking process is tedious and time-consuming. This process can be automated by allowing the system to track orders and generate inventory reports. Inventory should be monitored, tracked and order only by management with monthly inventory reports being sent to the company’s owner. Employees should be required to store personal belongings in a locker secured by either a combination or key lock. Employees should also be willing to consent to a search of personal belongings prior to the end of their shift. These steps isolate inventory issues and greatly eliminate employee theft. Below, an internal flow chart has been provided to identify the risks and incorporate the controls.