INTERNAL CONTROL PAPERThe procedures involved in accounts payable for Jamona.com is reviewed in detail and this paper assesses the strengths and weaknesses of their internal control system. The required additional controls to overcome the weaknesses are discussed in detail. The recommended and existing controls are analyzed and each control is identified as preventive, detective, or corrective.
Overview of Internal ControlInternal control is the term used to describe the policies, plans, and procedures implemented by a firm to protect the assets of the organization. The internal controls are tools that the management, board of directors and other employees should abide by. Management is responsible for creating these policies and to encourage employees to abide by the policies (Moscove & Simkin & Bagranoff, 2003, p. 4).
Strengths of Jamona's internal controlsSeveral strengths are identified by carefully reviewing the procedures involved in Jamona's accounts payable department. The office manager (a) receives invoices in mail, (b) routes invoice to accounts payable department, c) receives bank statement, cancelled checks, (d) accounts for numerical sequence of checks and files them in numerical sequence are identified as strengths in Jamona's internal control system.
English: Internal Model Control Deutsch: Internal ...
English: Figure 18: The structure of an internal c...
English: Figure 16: Set-up and roles within the ex...The manager responsibilities are identified as strengths because internal process aims to isolate financial approvals so as to create a separation of duties. The office manager prevents employees accessing checks by properly accounting and filing them in numerical sequence.
The account payable department a) reviews invoice, b) codes for proper expense account, c) enters account payable into accounting system are considered as strengths in their internal control system. By closely reviewing all invoices prior to payment prevents fraud and ensures payments are made to related transactions only. Assigning a proper code for each expense will help the management to ascertain the total expenses incurred for each activity.
Weaknesses of Jamona's internal controlsThe office manager...