Internal Controls

Companies need several different types of controls in place in order for the business to run successfully. In this paper I will discuss those principals and controls via several scenarios. It is essential to learn what controls need to be in place in order for the business to thrive. The importance of internal auditing and segregation of duties is outlined and the importance of safeguarding assets.
      The Idaho Company scenario provides several examples of weakness within the company and its procedures. The first weakness that is present is that Idaho Company does not use pre-numbered checks. The use of pre-numbered checks will cut down on the risk of missing checks within the sequence. The second weakness that I noticed was that both the treasurer and the purchasing agent are allowed to issue checks. This procedure leaves room for error between the purchasing agent and the treasurer. If the money is missing or bills are not being paid it will be more difficult to see where and with whom the error occurred. The third weakness that I found was that the checks were kept in an unlocked file cabinet. Idaho Company is obviously not safeguarding its assets or trying to prevent theft. The fourth and final weakness that was present was that the account was reconciled by the treasurer. This does not provide any sort of security for the company. The accounts should not be reconciled by the check issuer.

MEMO:
          As a consultant for Idaho Company I would like to recommend that the company implement a few changes into the daily procedures. The first change that I would like to recommend is that all of the checks should become pre-numbered. This will help accounting account for each check that is issued and assure the company that none are missing. The second recommendation that I will recommend is that Idaho Company limits one person to issue checks. This way if an error were to occur, the investigation will be much simpler. The third recommendation is that... [continues]

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