Accounting

1. Running head: AMAZING (PVT) LIMITED 1
Amazing (Pvt) Limited
Student’s Name
University Affiliation

2. AMAZING (PVT) LIMITED 2
Task 1
Inherent limitations of an internal control system.
According to the Auditing Standard Board, companies should have a strong internal control
system to help in giving guidance on how to running the accounting and other related activities of a
company. The primary aim of internal control systems in an organization is to guarantee compliance
with the professional standard when reporting about financial activities (Arwinge, 2015). Despite the
presence of these control systems, some inherent limitations reduce their effectiveness.
Collusion and management override
In most instances, evenif employees of a company are well, trained, and adequately understand
the setaccounting internal control systemsworks, it doesnot meanthat all employees will work together
to follow them. In some instances, employees assigned specific duties may work together to commit
fraud rather than doing what their engagement letter states. Such acts reduce that efficiency of the
internal control systems of companies. In the case of Amazing (Pvt)Limited, the approval of time sheets
is not in the system but is on the hard copy of the time sheet which can easily be changed by employees
in charge (Arwinge, 2015). Such activities can encourage committing of frauds, which reduces the
effectiveness and compliance with the internal control system as required by the Auditing Standard
Board.
Cost-benefit considerations
Cost-benefit consideration is another inherent limitation that influences the efficiency of the
internal control systemsin many organizations. In some casesofsmall companies, a pragmatic approach
need to be considered to enhance the smooth running of activities. Such approaches are like the total
cost of engaging extra accounting professionals to promote efficient segregation of duties among
experts might overweigh the maximum benefits that can be derived from improving the efficacy of
internal control systems (Lee, 2019). In the case of Amazing (Pvt) Limited, even if the company
increases the number of accounting staffs to perform specific tasks, the benefits and efficiency derived
from this might not correspond to amount of cost incurred to employ new accounting staffs. Therefore,

3. AMAZING (PVT) LIMITED 3
it is only appropriate to re-trained the current accounting of Amazing (Pvt) Limited to enable them to
perform their duties effectively rather than recruiting new employees.
Ability to cope with non-routine transactions
Non-routine transactions are financial activities that a company may incur unexpectedly and
are essential to help running business activities of an entity. In many instances, companies fail to have
the ability to predict the likelihood of occurrence of non-routine transactions arising ways that are likely
that the internal control systems are appropriate to cope with such transactions. In the cases Amazing
(Pvt)Limited, the ability to deal with the non-routine transaction canbe some of the issuesthat company
is facing which reduces the effectiveness of the control systems (Lee, 2019). For instance, the
procedure for updating the timesheet system might not be effective because the company could not cope
with the non-routine transaction due to extra cost attracted. Therefore,for the company deal with non-
routine transactions, the management should have supplementary allocations to cater for any
unexpected spending.
Task 2
Recommendation of appropriate internal controls systems for Amazing (Pvt) Limited
Internal control systems refer to a combination of policies and procedures that are set by the
management of an organization to give guidelines of how various activities should be carried out.
Accounting policies and procedures implemented by the management of any company should conform
to rules of the Generally Accepted Accounting Standards. These guidelines are adopted by companies
to enhance smooth running of activities as well as ensuring compliance with professional guideline
while performing accounting tasks (Hopkinson, 2017). Similarly, Amazing (Pvt) Limited should
implement appropriate internal control systems that conform to the guidelines of accounting Standard
Board to help to eliminate the deficiencies that the company is currently facing. In doing so, the
company should adopt the following internal control systems.
Monitoring and evaluation of all activities performed by accounting staffs. Continuous
supervision, monitoring, and evaluation of accounting activities. In doing so, the top management of
the firm will be able to make an audit trail to ensure that all procedures are followed while performing

4. AMAZING (PVT) LIMITED 4
all accounting activities. Consequently, this will to eliminate the deficiency where the approval of time
sheets is not updated in the system, yet they are available in hard copy.
Secondly, the company should adopt useful information and communication systems to help in
proper updating communication of all accounting information as required by regulations of the
Accounting Standards Board. Presence of adequate information and communication systems will help
to ensure that accounting staffs perform their work to completion and effectively communicate that
information to relevant authorities asaccounting standards (Hightower, 2017). Similarly, this will help
Amazing (Pvt) Limited to eliminate deficiencies such as cases where the procedure of updating the
timesheet system is not documented and communicated, thus, resulting in erroneous updates of
accounting information.
Also, the company should put in place appropriate productive control environment for all
activities in different departments. Creating a favorable environment in an organization help to ensure
that accounting activities are performed according to the guiding principles (Sanusi, Johari, Said, &
Iskandar, 2015). In the case ofAmazing (Pvt) Limited, having effective control environment will assist
in making should that there is the authorization of copies of information used in hard copy and what is
entered to the system.
Lastly, setting strong passwordsand userlogins to the systemsto accessaccounting information
will help to safeguard accounting information used in different departments. For instance, in the case,
Amazing (Pvt) Limited, the login to the system has a common username and password that is used by
all employees ((Hightower, 2017). As such,confidential accounting information cannot be adequately
safeguarded as required by the accounting standards. Therefore,setting strong and different passwords
to log to the system by employees is a way of protecting confidential accounting information and
document from unauthorized access.

5. AMAZING (PVT) LIMITED 5
References
Arwinge, O. (2015). Internal control: A study of concept and themes. Pearson Education, Inc.
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Franzetti, C. (2016). Operational risk modeling and management. Chapman and Hall/CRC.
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Hightower, R. (2017). Internal controls policies and procedures. John Wiley & Sons.
Hilton, R. W., & Platt, D. E. (2015). Managerial accounting: creating value in a dynamic
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Hopkinson, M. (2017). The project risk maturity model: Measuring and improving risk
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Lee, G. J. (2019). Internal Control Strategies for Compliance with the Sarbanes-Oxley Act of
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