Kudler Foods Case Study

Internal Controls and Risk Evaluation

Kudler Food’s internal control is designed to provide reasonable assurance in regards to the reliability of Kudler Food’s financial reporting. With proper internal controls Kudler Food’s strives for effectiveness and efficiency of all the company’s operations along with compliance with the laws and regulations that are applicable in the State of California.
Kudler Food’s internal control consists of five components. The first component is the control environment that is set by Kudler’s Foods. This is where the tone of the company is set and is the foundation that makes up all other components of internal control that also provides the discipline and structure of identify of relevant risks for achievement of the goals set by the company and forming a basis for determining how the risks should be managed. The second component is risk. The risk events can be uncertain, deciding whether to accept a risk or avoid a risk related activity that can have significant consequences to the company. Kudler’s decision in choosing to reduce risk implies that Kudler is committed to
Internal controls are needed in to be in place in the credit approval department as well. This would ensure lowering the risk of loss of income due to writing off of bad debts and ensure that there are not any irregularities in the accounts receivables. Segregation of duties between the person that opens the receivables and one that post the accounts receivables should be separated to ensure proper reporting in the accounts receivable. Kudler may benefit from using a lock box at the bank where all receivables are received at the bank and then properly