Internal Control and Risk Evaluation Essay

In todays society, knowledgeable swears atomic number 18 applied to yield an placements managers to become to a greater extent successfully to release the responsibilities by applying and perceptiveness internecine tick concepts. inherent guarantees atomic number 18 most frequently saw as a lot of red tapeline however, informal controls strike different constituent when confirming high moral and estimable values which should be communicated in an memorial tablet. inwrought controls argon essentially composed of quintuplet interrelated components which atomic number 18 communication and in piddleation, monitoring, control environment, risk of infection assessment, and control activities. The four neighborhoods of concerns are notes receivable, paysheet, accounts payable, and inventory. The identification of risks in the system, how the risk would be merged into the flowcharts, the ingrained controls that must be commitd, and an evaluation of the native cont rol system, and distant controls must be used. The biggest vulnerability area is accounts receivable because of an auditing and accounting system perspective this is where the quest money is received into the organization. In the flowchart, account receivable is recognizable as the blame where payments testament be posted. Account receivable has a secondary risk area in which the late charges, interest and new(prenominal) fees are added.The area of payroll is where the main risk concern leave alone unceasingly be an individual superseding payroll internal controls. An additional internal control that hatful be applied by use of flowchart designs will be for original individuals having get to to the authentic payroll treat function that provide rile for authorizations of work out deposit/ or the printing of the payroll checks. Authorization is the main internal control area with accounts payable. The non inhabitence of authorization is the major(ip) weakness, which di splace be in the form of control overrides in the AIS and personal form. As associated to the flowchart, there is an important weakness that willexist in the process from the requesting division to other areas. The most censorious internal control point is the inventory because of the physical counts corresponding with the AIS records. On the flowchart, inventory is determine as the point where inventory levels are maintained and tracked because of the easy entrance the area poses the biggest risk. Risks in SystemThe risk with using any accounting software program will always have uncertainties. just about of the risks are human error info input, warrantor breaches, and fraud that put amplification pres real on precaution mental faculty in maintaining or achieving financial targets which have intensified the risk of in set aside accounting or disappointment to disclose associated ships company legal proceeding. The statement above only mover that the organization nee ds to have security controls that forbid management from manipulating data for investor purposes. another(prenominal) essential risk would be the giving medication of illegal programs which delete or access files, corrupt files by the installation of a virus, changing the programs that cause unacceptable data to process. Threats and risks to databases might take on unauthorized access that allows altering, deleting, corrupting, destroying, or stealing data (Beard and Wen, 2007, p. 212). To wield the loss of important data using backup files are crucial that will be overwhelming to an organization. The organizations good reputation will be at risk if essential data reporting is misused, misdirected, and could cause damage to the competiveness of the organization. intrinsic Risks and ControlsIn the society today numerous hackers is known to have both outside(a) and internal risks that can ruin an organization security systems. Therefore, the collection of data is critical to e stablishing virtuous security controls for external and internal that ensure complete secure transactions, chit of the data is valid, and free from errors. Tapping into the organizations telecommunication lines can be an activity that may bad impact the data collection (Beard and Wen, 2007, p. 217). combine exceptional internal control methods are a requirement to address film to major risks in an organization electronic accounting system because the responsibility primarily on the management staff. Creating and maintaining active internal controls includes the assessment, testing, and documentationof internal controls which includes operations, access, program development, and changes. Internal Controls to Mitigate RiskEliminating risk of internal controls is by establishing some of the following upkeep of records that detail and reflect all transactions Disposition of said transactions including the inclining of the assets Record transactions accurately to concede valid fin ancial statements in conformation with GAAP Implement timely and determinant detection of unauthorized transactions evaluation of Internal ControlsFor Kudler Fine Foods to certify appropriate application of internal controls into the organization systems, control activities must exist. The internal controls will include but are not restrain to activity or functional management evaluations, transaction assessments, reconciliations, statistics processing and physical controls, and insulation of duties. The evaluation of application of internal controls intimate an accounting system should be ongoing and frequent. Kudler Fine Foods must catch up with sure the organization maintain acceptable resources, make available financial, operational, and compliance with correlated information. The organization employees obligations and control responsibilities should be successfully communicated eon ensuring compliance is the number one crying factor. Kudler Fine Foods channels must exi st for every individual to report alleged improprieties and the employee recommendations are petitioned and acknowledged.ReferencesBeard, D. and Wen, H.J. (2007). Reducing the Threat Levels for story Information Systems. Challenges for Management, Accountants, Auditors, and Academicians. Retrieved August 12, 2009 from http//www.nysscpa.org/cpajournal/2007/507/essentials/p34.htm University of Pennsylvania, (2009). Internal Controls Self-Assessment A Guide to Internal Controls. Retrieved August 13, 2009 from http//www.sru.edu/pages/1511.asp