Internal Control and Risk Evaluation
INTERNAL CONTROL AND RISK EVALUATION PAPER
ACCOUNTING 542
INTERNAL CONTROL AND RISK EVALUATION PAPER Many businesses are concerned with information technology risks. Many organizations are concerned with different types of risk and attempt to control risk as they are assessed. In order to control risk, organizations must create control environments that set the tone of employee awareness and promote operational efficiency. One attempt to control risk is through risk assessment. The purpose of risk assessment is to identify organizational risks and evaluate additional or specific control procedures. The purpose of this paper is to analyze and assess the risks within the flow charts of accounts payable, accounts receivable, inventory, and payroll recommended by learning team E for Kudler Fine Foods, design internal controls to mitigate risks to the system, evaluate the application of internal controls to the system and discuss other controls outside the system that Kudler Foods may need.
Risk Assessments The accounts payable risk assessment is the validation of purchase orders. This flow chart should incorporate a matching invoice system where the purchase orders are required to match the receiving information. The matching system allows the purchase order to precede the arrival of the vendor’s invoice therefore allowing the accounts payable department to have both receiving information and purchasing information when the invoice arrives. Incorporating a matching procedure helps ensure that the invoice for goods or services has been received and the amount of the invoice is authorized via purchase order by authorized personnel. This system also ensures that goods being paid for have been authorized by proper personnel. All disbursements should be made by check and digitally signed and authorized by authorized treasury personnel in the accounts payable department. Management should be concerned about purchases that cannot be traced to inventory,
ACCOUNTING 542
INTERNAL CONTROL AND RISK EVALUATION PAPER Many businesses are concerned with information technology risks. Many organizations are concerned with different types of risk and attempt to control risk as they are assessed. In order to control risk, organizations must create control environments that set the tone of employee awareness and promote operational efficiency. One attempt to control risk is through risk assessment. The purpose of risk assessment is to identify organizational risks and evaluate additional or specific control procedures. The purpose of this paper is to analyze and assess the risks within the flow charts of accounts payable, accounts receivable, inventory, and payroll recommended by learning team E for Kudler Fine Foods, design internal controls to mitigate risks to the system, evaluate the application of internal controls to the system and discuss other controls outside the system that Kudler Foods may need.
Risk Assessments The accounts payable risk assessment is the validation of purchase orders. This flow chart should incorporate a matching invoice system where the purchase orders are required to match the receiving information. The matching system allows the purchase order to precede the arrival of the vendor’s invoice therefore allowing the accounts payable department to have both receiving information and purchasing information when the invoice arrives. Incorporating a matching procedure helps ensure that the invoice for goods or services has been received and the amount of the invoice is authorized via purchase order by authorized personnel. This system also ensures that goods being paid for have been authorized by proper personnel. All disbursements should be made by check and digitally signed and authorized by authorized treasury personnel in the accounts payable department. Management should be concerned about purchases that cannot be traced to inventory,
References: Hunton, J. Bryant, S. & Bagranoff, N. (2004). Core concepts of information technology auditing New York: Wiley and Sons University of Phoenix. (2008) Kudler Fine Foods. Retrieved from University of Phoenix, ACC 542-Accounting Information Systems website