Essay on Kudler Internal Control and Risk Evaluation

1085 Words Mar 16th, 2014 5 Pages
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
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All invoices should be handled by a single department. Once they have been entered into the accounting system, a manager should be responsible for reviewing and approving the scheduled payments. This manager should have view only rights to the accounting system. The same process should apply to the accounts receivable system with one department or employee being responsible for depositing monies into Kudler’s bank account, while a separate department or employee is responsible for reconciling those deposits in the accounting system. Any discrepancies in the amounts should be investigated by a member of management.
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.
Management

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