Internal Control Issues
1.List what you believe should have been the three to five key internal control objectives for Goodner’s Huntington sales office.
1. Assets Safeguard
The padlock and other some security are used as a physical protection of Goodner’s inventory from stolen by unauthorized person. 2. Authorization of Transaction
Goodner’s policy said that the new customer required an approval of the sale manager for the credit sale. The objective of this policy is to control the authorization of employee by using an approval from the senior manager to determine the credit term of new customer. 3. Top-level reviews
Annual review by the internal audit is used in order to inspire the operation and compare the performance with a plan of the business, so that the company can find out that there are any problems or fraud or not. 4. Human Resource Policies and Practices
Goodner’s policy about hiring an employee is relied on honesty and integrity of the employee which is required 3 strong as references and preferably from reputable individual with some connection to Goodner Brother. 5. Adequate Document and Records
The computerized accounting system is used at each Goodner sales outlet. The system will record the sale and purchase transactions which were recorded by the bookkeeper and sales representative. So the company can record all transaction from each sale outlet.
2. List the key internal control weaknesses that were evident in the Huntington unit’s operations. Internal control weaknesses:
1. Unrestricted access to the accounting system, cause the large volume of sales and purchase transaction often swamped (possible to be double recorded) 2. Recording transactions didn’t in timely basis, instead of record from source of documents; the sales representative just recorded the entry from the scrap paper that they jotted things down. 3. Lack of segregation of duties:
3.1 The sales person is also the one...