close
test_template

How Internal Control Function and The Efficiency of a Company Are Related

Human-Written
download print

About this sample

About this sample

close
Human-Written

Words: 1843 |

Pages: 4|

10 min read

Published: Apr 11, 2019

Words: 1843|Pages: 4|10 min read

Published: Apr 11, 2019

Table of contents

  1. Abstract
  2. Question 1
  3. Question 2
  4. Question 3
  5. Question 4
  6. Question 5
  7. Question 6
  8. Question 7

Abstract

The internal control function is a critical aspect of the organization as it helps in evaluating the efficiency and effectiveness of the company. Therefore, this chapter highlights the appropriate business control practices that protect the company from corruption and misappropriation of assets. Additionally, the chapter demonstrates the financial controls that safeguard the organization from fraudulent financial statements, and the rationale of background checks on the employee’s criminal and drug testing. Finally, the chapter shades light on the importance of the risk management professionals to the business. It also stresses the need and the significance of hiring an outside firm in auditing of the company’s books of accounts.

Question 1

What financial or business controls are in place to protect the company from misappropriation of assets?

Business owner/Manager’s: Answer 1

Establishment and implementation of appropriate internal financial controls within the inner structure of the company, such as establishing employee's responsibilities, maintaining accurate and adequate financial records. Also, employee’s adherence to the company’s acceptable laws and regulations help safeguard the business from possible misappropriation of assets.

Business owner/Manager’s answer converted to textbook language

Adopting and implementing appropriate internal financial controls to enhance efficiency and effectiveness within the internal structure of the company. The internal financial controls include: performing of regular and transparent auditing of the company’s financial records to be able to determine the possible limitations within the internal control. Additionally, appropriate technological checks and division of duties and responsibilities among employees for specific financial transactions prevent the possible misappropriation of company assets.

Recommendation/Explanation

Misappropriation of company’s assets has been quite common in the modern business community. Therefore, there is the need to establish and implement appropriate internal control policies and regulations to help minimize the degree and frequency of the illegal behaviors within the organization. Systems such as rotation of employees, use of technological controls and maintaining of accurate and adequate financial records will help in protecting the company from misappropriation of its assets.

Question 2

What financial or business controls are in place to protect the company from corruption?

Business owner/Manager’s Answer 2:

Development of appropriate policies and procedures that effectively monitors compliance with internal financial controls will help minimize corruption risks and thus enhance transparency and accountability within the company. Hiring staff that is qualified and in full conformity with the company policies is critical in reducing corruption at the workplace. Also, organizing training programs to will ensure that the employees are well trained and guided by the principles and policies governing the company.

Business owner/Manager’s answer converted to textbook language

Ensuring and establishing strong internal financial control policies through conducting a thorough scrutiny of the company's financial records by preferably a third party. The third party doing the scrutiny must be competent, qualified and with a solid reputation to safeguard the integrity of the company as well as the process. Additionally, the companies need to train their employees to be in full conformity with the organization's laws and regulations.

Recommendation/Explanation

Corruption in the places of work has been a major hindrance to the growth of the company. Employees who tend to engage in illegal activities slow down; the otherwise would have been the fast development of the company. Therefore, there is the need to establish appropriate policies and procedures to help curb this vice within the organization. Additionally, employees who are found culpable of the illegal activities need to punished within the laws and regulations guiding the organization, and if possible relieved of their duties.

Question 3

What financial or business controls are in place to protect the company from Fraudulent Financial Statements?

Business owner/Manager’s Answer 3:

Getting an in-depth knowledge and information about the employee’s behavioral traits will help the manager in possible detection fraudulent behaviors. Also, effective reporting of financial records enhances and protects the company in the likely occurrence of fraudulence in financial statements. The existence of independent and competent outside accounting firms will assist in the detection of unacceptable practices within the company, especially the manufacture of financial statements.

Business owner/Manager’s answer converted to textbook language.

Organization's internal control practices such as the rotation of employees and the regular monitoring of financial balances make it easier for the company manager to be able to detect possible discrepancies in financial records. Also, the hiring of financial experts such as the Certified Fraud Examiners (CFE), Certified Public Accountants (CPA) and the Certified Financial Forensics (CFF) helps in the developing of appropriate policies which facilitate in quick detection of fraudulent financial activities within the company.

Recommendation/Conclusion:

Major companies and corporation have been inefficient and unproductive because of the inappropriate practices of some of the employees. Fraudulent and illegal practices have crippled the development of our organizations in today corporate world. Therefore, there is a need to develop strict and appropriate policies and procedures within our organization. This will ensure earlier detection of fraud and thus prevent the occurrence of possible future practices. Consequently, this will facilitate the growth of our organization.

Question 4

Have you done any background checks including criminal and drug testing on your employees, especially the ones who handle cash? Are they bonded?

Business owner/Manager’s Answer 4:

I haven’t done any background checks such as criminal and drug testing to my employees yet. However, I believe background checks are imperative, and a must do practices within the organization for safety purposes. The most employee with inappropriate traits within the workplace is likely as a result of criminal and drug abuse nature they inhabit. Therefore, I believe there is the need to conduct criminal and drug testing consideration at the workplace so that to minimize possible risk associated with this behavior.

Business owner/Manager’s answer converted to textbook language.

Drug testing and criminal background checks are substantial within the organization. A company is required to conduct regular drug testing and criminal background checks during the hiring process. This will prevent the possibility of offering employment opportunities to the candidates with inappropriate behaviors. Consequently, this will result in the reduction of the unacceptable and illegal practices within the places of work.

Recommendation/Conclusion

Lack of employee’s background checks especially in criminal and drug testing has contributed to the increased illegal and unacceptable behaviors within our places of work. To ensure future reduction of these behaviors at the location of work, organizations need to conduct background checks and drug-testing consideration of the candidates before offering them with the employment opportunities. And thus helping the company from hiring the unsuitable candidates.

Question 5

Have you had a risk management professional access your areas of strengths and weakness in your business, including the insurance rider to protect your business from this type of loss.

Business owner/Manager’s Answer 5:

I have had a risk management professional access different areas of strengths and weakness with the company. Risk management specialist are vital elements within the organization as they help point out the company's weakness, and thus recommend on the possible improvements. Adopting SWOT analysis helps the business identify and evaluate the potential strengths, weakness, opportunity, and threats that might influence the growth of the firm. Therefore, risk management professionals help to determine various factors that affect the growth and the potential opportunities for the firm and thus guiding the company during the decision-making process.

Business owner/Manager’s answer converted to textbook language.

Risk management professional help guide the company in deciding inherent uncertainties likely to affect the business. SWOT analysis provides a clear guideline on the appropriate practices to conduct in retaliating with the dynamic business analysis and hence enabling the manager make the right decision for the company with regards to the management of the future risks.

Recommendation/Conclusion

Any organization within our modern corporate world is prone to future risks and uncertainties. There is the need for the company to have regular risk management professional to guide the organization in the decision-making process. Additionally, companies need to adopt SWOT analysis in managing of various risks and uncertainties. SWOT analysis helps the company analyze its strengths, weaknesses, opportunities, and threats before making any with regards to the management of the risk.

Question 6

How often do you have an outside accounting firm review your books during the tax year? Who completes these audits?

Business owner/Manager’s Answer 6:

Companies should allow an outside accounting firm review their books of accounts quarterly in every financial year. This will ensure earlier detection of illegal behavioral traits, especially fraudulence in financial statements, thus developing appropriate policies and procedures to prevent future attempts of those behaviors. Audit in the company’s books of accounts ought to be done by competent and qualified professionals such as the certified public accountants.

Business owner/Manager’s answer converted to textbook language.

The company is required to conduct an audit of their books of accounts at least twice in each financial year. This auditing process is done with the help of hired experts from the third party who must be qualified. Also, they should have a solid reputation to safeguard the integrity of the process. The organization can either hire the certified public account or the certified financial forensics to help in the auditing process of the books of accounts.

Recommendation/Conclusion

The verification process of the company’s books of account is an essential process within the organization; it helps in evaluating the efficiency of the company. Companies need to have their books of account audited quarterly by the help of independent and qualified third party’s expertise. Quarterly auditing of the company's accounting records facilitates the earlier detection of possible fraudulence in financial statements, and thus more early prevention of the vice.

Question 7

What are the roles and responsibilities of the internal auditors about financial or business control within the company.

The functions and responsibilities of the internal auditors are to ensure the efficiency of the company's internal control functions. Internal auditors help in shading light to the undetected inefficiency within the company, especially the misappropriation of the assets of the organization. And thus, make appropriate recommendations for the future improvement of the internal control function.

Business owner/Manager’s answer converted to textbook language.

The role and the internal auditor must protect and safeguard the company from illegal and unacceptable practices such as fraudulence of financial statements. Also, it's the primary role of the internal auditor to ensure that the firm complies with the standard laws, regulations and auditing statutes. Internal auditors must evaluate the efficiency of the enterprise, and made appropriate recommendations if any.

Recommendation/Conclusion

Get a custom paper now from our expert writers.

Company auditors are vital elements to the internal control functions of the organization and the entire business community. Internal auditors play a primary role in enhancing the growth of the company. They evaluate and unfold the probable inefficiency within the company and thus setting the organization in the right direction for future growth.

Image of Prof. Linda Burke
This essay was reviewed by
Prof. Linda Burke

Cite this Essay

How Internal Control Function and the Efficiency of a Company Are Related. (2019, April 10). GradesFixer. Retrieved December 8, 2024, from https://gradesfixer.com/free-essay-examples/how-internal-control-function-and-the-efficiency-of-a-company-are-related/
“How Internal Control Function and the Efficiency of a Company Are Related.” GradesFixer, 10 Apr. 2019, gradesfixer.com/free-essay-examples/how-internal-control-function-and-the-efficiency-of-a-company-are-related/
How Internal Control Function and the Efficiency of a Company Are Related. [online]. Available at: <https://gradesfixer.com/free-essay-examples/how-internal-control-function-and-the-efficiency-of-a-company-are-related/> [Accessed 8 Dec. 2024].
How Internal Control Function and the Efficiency of a Company Are Related [Internet]. GradesFixer. 2019 Apr 10 [cited 2024 Dec 8]. Available from: https://gradesfixer.com/free-essay-examples/how-internal-control-function-and-the-efficiency-of-a-company-are-related/
copy
Keep in mind: This sample was shared by another student.
  • 450+ experts on 30 subjects ready to help
  • Custom essay delivered in as few as 3 hours
Write my essay

Still can’t find what you need?

Browse our vast selection of original essay samples, each expertly formatted and styled

close

Where do you want us to send this sample?

    By clicking “Continue”, you agree to our terms of service and privacy policy.

    close

    Be careful. This essay is not unique

    This essay was donated by a student and is likely to have been used and submitted before

    Download this Sample

    Free samples may contain mistakes and not unique parts

    close

    Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

    close

    Thanks!

    Please check your inbox.

    We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

    clock-banner-side

    Get Your
    Personalized Essay in 3 Hours or Less!

    exit-popup-close
    We can help you get a better grade and deliver your task on time!
    • Instructions Followed To The Letter
    • Deadlines Met At Every Stage
    • Unique And Plagiarism Free
    Order your paper now