Explain at least three internal controls you have seen used to safeguard assets
I need help with a response to two peers’ discussion posts.
Peer #1-Carlee
Explain at least three internal controls you have seen used to safeguard assets (such as cash or inventory) or ensure adherence to company policies.
This week, we learned internal control refers to an organization’s strategy and all connected actions taken to protect assets, increase operational effectiveness, assure accurate and trustworthy accounting records, and motivate personnel to abide by business policies. (Miller-Nobles, Mattison, 2015). The internal controls that we practice at my place of employment:
For Fixed Assets, a physical inventory procedure should be in place. All production and expense inventory should be subject to a physical inventory and cycle counting procedure.
Every month, all intercompany payables and receivables activity is reconciled.
A system upgrade or organizational change may trigger a monthly review of system access controls.
The necessary paperwork must back up internal control representations and statements.
Discuss whether the controls were effective.
The internal controls that Walt’s Wholesale Meats have are adequate. It ensures that we are doing things correctly, and with a team, we can catch things that may line up differently. I process the payroll every week for our company, and before I can submit it, my accounting manager has to audit every piece before approval. This is just one example of our internal controls. Another example is the account reconciliations for each separate category. Accounts payable, accounts receivable, stock and inventory, and payroll. The system we have in place is beneficial to the company.
Provide an example of one additional internal control you would like to see implemented at your current employer based on your studies this week.
I want a clearer view of the assignment of responsibilities for each employee dealing with internal controls. Often, we complete the same task without communicating, and it consumes time that someone else could be working on another project. In a business with good internal controls, no duty is overlooked. Each employee has specific, carefully defined responsibilities. This assignment of responsibilities creates job accountability, thus ensuring all critical tasks get done. (Miller-Nobles, Mattison, 2015).
References:
Miller-Nobles/Mattison. Horngren’s accounting: The financial chapters (7th ed.). Pearson.
Peer #2-Chelsey
Explain at least three internal controls you have seen used in practice to safeguard assets (such as cash or inventory) or ensure adherence to company policies.
I used to manage a Dollar General store and they had several internal controls that they used. The cash every day was locked in a safe that only certain people had access to until a manager took the deposit to the bank. Every employee had their own sign-in to work at a cash register. This was very important to make sure if there were any discrepancies with sales you could find out who was logged in at the time. Every employee had to go through and complete training modules every couple of months to ensure that everyone was staying up to date with new policies and procedures.
Discuss whether the controls were effective.
I did not find the company’s controls to be very effective. People would share login information or multiple people signing on to the same computer, so you never really knew who was at fault for deposits being off at the end of the night. Also, people besides managers had the access code to the safe, which is never good. Like our text said if you don’t protect your cash, it can easily slip away (Miller-Nobles, Mattison,2015).
Provide an example of one additional internal control you would like to see implemented at your current employer based on your studies this week.
One additional internal control I would add is finding a better way to manage the inventory on hand. Dollar General has trucks that deliver shipments to every store automatically based on previous years’ sales. The store I worked at always had piles of inventory that never got put out and then would go on discount after the holiday was over, not realizing that most of the inventory never made it out of the back room. A lot of that inventory was thrown away and that was never accounted for in the system.
Reference:
Miller-Nobles/Mattison. Horngren’s accounting: The financial chapters (7th ed.). Pearson.
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