Report of Maf 680

Topics: Internal control, Audit, Quality assurance Pages: 6 (1249 words) Published: March 26, 2013
MAF 680
The problem faces by the Delima Enterprise Sdn. Bhd can be solve if the company implement some sort of internal control system in all activities. A system of internal control consists of policies and procedures designed to provide management with reasonable assurance that the company achieves its objectives and goals. Typically, there have three broad objectives in designing an effective internal control system, reliability of financial reporting, efficiency and effectiveness of operations and compliance with laws and regulations. Standard Operating Procedure (SOP) is one of the internal control systems that can be implemented by the company. A Standard Operating Procedure (SOP) is a set of written instructions that document a routine or repetitive activity followed by an organization. The development and use of SOPs are an integral part of a successful quality system as it provides individuals with the information to perform a job properly, and facilitates consistency in the quality and integrity of a product or end-result. The term “SOP” may not always be appropriate and terms such as protocols, instructions, worksheets, and laboratory operating procedures may also be used. SOPs will detail the regularly recurring work processes that are to be conducted or followed within an organization. They document the way the activities are to be performed in order to facilitate consistent conformance to technical and quality system requirements and to support data quality. They may describe, for example, fundamental programmatic actions and technical actions such as analytical processes, and processes for maintaining, calibrating, and using equipment. SOPs are intended to be specific to the organization or facility whose activities are described and assist that organization to maintain their quality control and quality assurance processes and ensure compliance with governmental regulations. SOPs should be written and documented properly for easy use and refer. If not, SOPs are of limited value. In addition, the best written SOPs also fail if they are not followed. Therefore, the use of SOPs needs to be reviewed and re- enforced by management, preferably the direct supervisor. Furthermore, the written SOPs should be put in place that is easy to see mostly for individuals who involve directly in the activities. In preparing the SOPs, the company should have a procedure in place for determining what procedures or processes need to be documented first. Those SOPs should then be written by individuals knowledgeable with the activity and the company’s internal structure. For example, in the case of Delima, Puan Balqis or Encik Salam should be the suitable person for this task. The other way is, they can also create a group or team for preparing SOPs. By using SOPs, the Delima should be able to prevent the mistake as well as errors in performing the operations. In terms of sales, for example, the employee will know what to do from the time of receiving orders until producing the invoice even if he or she do have any special skills in that area. Hence, SOPs should be prepared in a simple way, so that, individuals with basic understanding can understand. Another internal control that can be implementing by Delima Enterprise is Segregation of Duties. Segregation of duties is a concept of having more than one person to complete the task. It is basically to have one person handle only one type of task or power. Segregation of duties is critical to effective internal control because it reduces the risk of mistakes and inappropriate actions. It helps fight fraud by discouraging collusion. Example of segregation of duties such as the person who requisitions the purchase of goods or services should not be the person who approves the purchase. Regarding the Delima case, Puan Hashimah is responsible for approval of employee’s timesheet as well as payment of salaries. Supposedly, she only given the approval of the timesheet only, and...
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