2. internal control

1,360 views

Published on

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,360
On SlideShare
0
From Embeds
0
Number of Embeds
751
Actions
Shares
0
Downloads
32
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Develop a schedule at the beginning of each day and then inspect the work at the end of the day to verify that it was completed according to quality standards.
    Surprise inspections by arrival at site on random times to verify that the team is working according to schedule.
    You can ask employees to clock in and clock out at the beginning and ending of work.
    You can ask to return vehicles and equipment at the end of the day to a central location to prevent unathorized use.
    You can keep a log of odometer readings.
    You can bill customers after you have inspected the work.
  • 2. internal control

    1. 1. Universidad Cuauhtémoc Campus Aguascalientes Análisis de Costos Maestría en Administración INTERNAL CONTROLS
    2. 2. Internal Controls Contents 1 Issues you would face 2 Objectives & Elements3 Real World4 Internal Control Concept
    3. 3. Internal Controls Issues you would Face Some of the issues you would face as a manager in controlling the operation of a business are:  Service or product must be provided on time.  Quality must meet customer expectations.  Employees must provide work for the hours they are paid.  Work equipment should be used for business purposes only.  Vehicles should be used for business purposes only.  Customers must be billed and bills collected for services redered. How would you adress some of these issues?
    4. 4. Internal Controls Concept Internal Controls are the policies and procedures that protect assets from misuse, ensures that business information is accurate, and ensures that laws and regulations are being followed.  Business use internal controls to guide their operations and prevent abuses of their systems.
    5. 5. Internal Control Objectives Assets Safeguard Accurate Information Laws & Regulations Compliance Control Environment Internal Controls Assets are safeguard and used for business purposes only Employees comply with laws and regulations. Business information is accurate Risk Assessment Control Procedures Monitoring Information & Communication
    6. 6. Internal Control Elements Internal Controls Control Environment Risk Assessment Control Procedures Monitoring Information & Communication
    7. 7. 1. Control environment 2. Risk assessment 3. Control procedures 4. Monitoring 5. Information and communication Elements of Internal Control Internal Controls
    8. 8. Management philosophy and operating style influences the control environment. Internal Controls Control Environment
    9. 9. Internal Controls 1. Control environment 2. Risk assessment 3. Control procedures 4. Monitoring 5. Information and communication Elements of Internal Control
    10. 10. Once risks are identified, they can be analyzed to estimate their significance, to assess their likelihood of occurring, and to determine actions that will minimize them. Internal Controls Risk Assessment
    11. 11. Internal Controls 1. Control environment 2. Risk assessment 3. Control procedures 4. Monitoring 5. Information and communication Elements of Internal Control
    12. 12. Internal Controls  Competent Personnel  Rotating Duties  Mandatory Vacations  Separating Responsibilities for Related Operations, Custody of Assets, and Accounting (Segregation of Duties)  Proofs and Security Measures Control Procedures
    13. 13. Process Accounting Operations Custody of Assets Receiving SuppliesPurchasing of Supplies Paying Supplies Segregation of Duties Internal Controls Independent check Independent check Independent check
    14. 14. 1. Orders may be placed on the basis of friendship with a supplier, rather than on price, quality, and other objective factors. 2. The quantity and quality of supplies received may not be verified, thus causing payment for supplies not received or poor-quality supplies. 3. Supplies may be stolen by the employee. 4. The validity and accuracy of invoices may be verified carelessly. Otherwise, the following abuses are possible: Internal Controls Segregation of Duties
    15. 15. 1. Control environment 2. Risk assessment 3. Control procedures 4. Monitoring 5. Information and communication Elements of Internal Control Internal Controls
    16. 16. Warning Signs 1. Abrupt change in lifestyle (without winning the lottery). 2. Close social relationship with suppliers. 3. Refusing to take a vacation. 4. Frequent borrowing from other employees. 5. Excessive use of alcohol or drugs. 1. Missing documents or gaps in transaction numbers (Could mean documents are being used for fraudulent transactions). 2. An unusual increase in customer refunds (refunds may be phony) 3. Differences between daily cash receipts and bank deposits (could mean receipts are pocketed before being deposited). 4. Suden increase in slow payments (employee may be pocketing the payment). 5. Backlog in recording transactions (possibly an attempt to delay detection of fraud). 1 2 Internal Controls
    17. 17. An accounting clerk for the Grant County (Washington) Alcoholism Program was in charge of collecting money, making deposits, and keeping the records. While the clerk was away on maternity leave, the replacement clerk discovered a fraud: $17,800 in fees had been collected but had been hidden for personal gain. A 1996 survey by KPMG, an international accounting firm, identified expense accounts manipulation, receiving payments from suppliers for favorable purchase treatment (kickbacks), purchase for personal use, and misappropriation of cash as the most typical methods of employee fraud. Based on a 1995 survey by Association of Fraud Examiners, annual fraud losses are estimated to be $400 billion in the United States, which for the average organization would be 6% of revenues or $9 per day per employee. REAL WORLD Internal Controls
    18. 18. An employee of J.C Penney Co. was convicted of taking $1 million in bribes and kickbacks from suppliers in exchange for information about competitors´ bids. One of the prosecuting attorneys told the court. “This case will be discussed in corporate boardrooms… The message ought to be sent out that there´s a consequence to corporate fraud.” REAL WORLD Internal Controls In one of the largest frauds ever committed against a university, a former financial aid officer for New York University, was charged with stealing $4.1M from the state of New York. The aid officer allegedly falsified over a thousand tuition assistance checks to students who were not entitled to receive aid and who did not know about the checks. The aid officer deposited the bogus checks for personal use. The initial evidence of the fraud was the officer spending $780K on expensive jewelry.
    19. 19. Universidad Cuauhtémoc Campus Aguascalientes Análisis de Costos Maestría en Administración

    ×