Internal Control Weakness and Corrective Actions

Topics: Internal control, Employment, English-language films Pages: 2 (684 words) Published: January 23, 2011
Internal Control Weakness and Corrective Actions
Fan Company A has eight weaknesses with the current internal control system. I will name each weakness and the corrective action for each weakness identified that will improve the internal control system to help protect the company’s cast and inventory assets and to prevent unethical actions of employees. The first internal control weakness that I found is the accountant decided not to check the references on the two part time employees. The accountants reasoning were that the references that she had previous experience with did not provide useful information. This procedure is bad internal control because the employer can be held liable if the employee does any unlawful act and the employer did not investigate the background and references of the employee. The correct internal control procedure that the accountant should do is check both part time employees references before hiring and do a background check. The second internal control weakness that I found was that the two employees from the two shifts share the same cash draw. This can cause a problem because neither employee can be held liable if a shortage of cash occurs. The corrective action would be for each employee to have their own cash drawn that is counted at the beginning of the shift and end of the shift and a paper signed to validate the amount in the draw. This way the employee is held accountable for the amount of money in the cash draw. The third internal control weakness that I found was that the cash is kept in the office until Friday night when the accountant makes the weekly deposit. This can cause cash to be stolen or lost in addition can make finding out a problem with the cash receipts harder when not processed on a daily basis. The corrective action would be for the cash receipts and cash to be counted daily and deposited into Fan Company A’s bank account. The fourth internal control weakness is that the accountant was the...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • internal control Essay
  • Evaluating Internal Controls Essay
  • Internal Control Essay
  • Corrective Actions Essay
  • Essay about Internal Controls
  • Internal Control Essay
  • Internal Control Essay
  • Internal Controls Essay

Become a StudyMode Member

Sign Up - It's Free