Internal Control and System Design
Internal Management report
The Company is a medium size retail store that operates within the suburb of NSW. As observed, there has been a decline in the Company’s due to which the shareholders were worried such scenario. In the previous general meeting shareholders had requested to change the CEO. However, new CEO has been appointed and internal audit has been formulated. The internal management report has been assessing eth Company’s weakness, noncompliance issues, strategies and process of implementation.
Weaknesses of the operation:
The weakness of the company lies in the fact that there are no effective sales teamthat are able to deliver the entries of customer’s feedback, in handling the customer and sales person relationship, checking the invoices of customer complaints. In addition, the accounts clerk prepares and evaluates the report all by himself. The company is unable to pay the debts due to shortage of funds.
The company witnesses several pitfalls deteriorating sales structure as its has no limits in reference to the size of the order approval while the account team is occupied and unable to assess the credit ratings of every order; unauthorized discounts has been transacted without any authorized supervision; the customer queries and feedbacks have been registered in unnumbered sales book resulting in the abstract and unidentified sources of customer details (Sun et al. 2014) Besides, the payable clerk is busy and therefore is unable to supply and register invoices compared with goods receiving record. All these factors attempt to weaken the company’s work force and sales target.
Change to be implemented to address the non-compliance:
The company needs to be efficient in its sale production and monitor its sales team. Government rules and regulations need to be followed and be applied by the company staff in regulating their business. It needs to cater towards reporting its everyday issues and register them accordingly under proper professional guidance (Sun et al. 2014). Besides the company needs to address the requirements both of the company and the customers prior to the targeted deadline. Compliance is not only the responsibility for the large companies rather need to be assessed by the small firms. It needs to constantly check the constraints addressing the set of regulations. The company needs to comply and coordinate with its management and sales team and strengthen its communication and foster business processes; evaluate the security measures and the procedures that can be applied in maintaining and assessing future risks, examine privacy measures and automate compliance measures; document, report and evaluate the data collection and records (Sadiq & Governatori, 2015).
Expected duration or time requirement to address identified areas:
The time required in evaluating the rules and regulations in relation to business processes is one month and in reference to the operations of sales management will be needing two weeks time that will include three levels of certification- assessment, record analysis and implementation.
|Identified areas||Time duration|
|Identification of rules and regulations||One month|
|Coordination and assessment of sales management ||one weeks|
|Privacy measures||two weeks |
|Data collection assessment||one weeks|
The CEO of the company need to assess and monitor eth previous and the existing rules and regulations and accordingly manage its production and sales. The CEO' need to be solely responsible for everyday management decisions and data collected from eth overall management and sales and implement the strategies towards the Company's long and short term plans. The CEO attempts to bridge the gap between the Board and management of the Company and communicates to the Board in relation to the business and management process and foster production.
The objective of eth small state agency is to formulate its own policies and make modifications that are agency-specific. The agency has been using purchase cards for about a year. However, it was used only by the two personnel the fiscal analyst and the administrative assistant. The agency aims at training the employee of the agency in using the purchase card. Besides, since the cards are used only by the two members it is important to address the issues and keep records of the purchases so that they are informed enough to be able to use the cards efficiently.
There are several risks associated with the use of purchasing cards. The risks pose both threats and change the existing set of policies. The risks that cause tension and pressure are lost funds, litigation, brand or company reputation risk, employee-fraud, misuse of purchase policy compliance, transaction penalties, data theft, selling of data, scamming, and phishing.
The purchasing card is used in controlling the expenditures where the duties are divided only to two members of eth agency that are fiscal analyst and the administrative assistant who reports and records the purchasing products and registers the cost and expenditure (Holma, Bask & Kauppi, 2015). In fact, the transactions are tracked and print is generated in keeping regular documents. The agency tends to control the risks associated with the purchasing card or the p-card. However, the agency under professional guidance it is important to address the expected risks and how it can impact the overall production and operations. It is important to determine the control activities that will be able to study the exposed frauds and financial loss (Feng, McVay & Skaife, 2014). The most important thing is to appoint members who will asses and record the day-to-day transactions and keep o a track of every purchase and product. The agency need to control the internal barrier caused due to the emergence of risks that can harm the image and reputation of the agency.
Violations of internal control:
It is important to account internal control that stands as one of the most important element under the company ensuring achievement of the targeted objectives effectiveness and efficiency. It helps in documenting important financial reporting in compliance with laws, regulations and policies. Besides it helps in controlling the threats posed by the risks, reduce asset and financial loss and ensure that recorded details and articulated plan is complete and accurate, financial statements are reliable, and that the plan complies with laws and regulation (Cumming et al. 2015). In coordinating the process of the internal control it is important to address five components of an internal control system that involve the control environment, the entity's risk assessment process, the information system, control activities and the monitoring of controls. The agency needs to address the violations against the control activities, control environment, risks, monitoring, data analysis and collection.