Research Report: Internal Controls

Description

Guidelines

Purpose

The purpose of this assignment to choose a company that you are familiar with and provide a simple set of internal controls that would protect and safeguard the companyænbsp;assets from theft or fraud; ensure continued reliability of the companyænbsp;accounting system and ensure that management objectives are implemented and executed as designed.

The following must be included in your submission:

Brief introduction of the selected company should include:

Name of company.

Nature of business.

Type of goods and services

Fiscal year

There are four categories listed below. Under each category, you will find the different sub-processes based on financial accounting information. You need to identify two controls that should be implemented to protect and safeguard the assets of the company for each sub-process.

Entity-Level Controls

Governance; control environment; risk assessment; information and communication.
Financial Management Processes
Budgeting and Forecasting
Investment Planning

Financial Reporting Processes

Financial statements and Year-end Reporting

Revenue, Receivables and Receipts

Purchasing, Payables and Payments

Contracts

Payroll
Capital Assets

Information Technology General Controls

Access Management

Change Management
Computer operations
Using the template provided, you will need to identify a control objective for each sub-process based on the key control activity. You will then identify the potential risk to the organization for each sub-process and articulate how would you classify the risk ®bsp;(High? Medium? Low?) Lastly, you will recommend a possible testing strategy.

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Things to consider when reviewing the submission
Overall Comments
1
Company Introduction
2
Set of Internal Controls
3
sider when reviewing the submission
1. Students responses will have differ, hence a measure of judgement is required.
2. Recommendations are appicable to categories provided
A brief introduction of the Company information including
Name and location
Name of owner and nature of the business
Type of products and Services
Fiscal period
All suitable and reasonable options are accepted
All sub-processes have been addressed
Control Objectives are included
Key Control Activities have identified
Potential risk has been identified
Possible testing strategy has been attempted
All recommended controls are applicable and feasible to the processes
All recommended controls convey meaning an insight to the process
Recommended controls are well written
Simple Set of Internal Control
Name and location of company:
Name of owner:
Nature of Business:
Type of Products or Services:
Fiscal period:
Processes and Objectives
Process Categories
Sub- Process
(What is the overall objective of the
control activity?)
Questions to be answered
1. Entity Level Controls
Governance
Control Environment
Risk Assessment
Information and Communication
2. Financial Management Process
Budgeting and Forecasting
Investment Planning
3. Financial Reporting Processes
Financial Statement
Year-end Reporting
Revenue, Receivable and Receipts
Purchasing, Payable and Payments
Payroll
Capital Assets
Contracts
4. Information Technology General
Controls
Design and Implementation Testing
Control Objectives
Access Management
Change Management
Computer Operations
Operating Effectiveness Testing
Sample – Key Control Activities – to consider
Potential Risk
Possible Testing Strategy
(What would you do to ensure that the control is functioning as designed?)
(What would happen if this control failed? And
how would you categorize it? High, Medium or
Low)
(How would you test your control activity?)
Examples may include: Principles and Strategies
Policies and Procedures
Chief Financial Officer with clear roles and responsibilities
Segregation of duties

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