Colorado Control Springs Company's Internal Paper Example

Paper Type:  Essay
Pages:  2
Wordcount:  446 Words
Date:  2022-09-22

Introduction

Internal control principles are those concepts that require the administration of a particular organization to set policies to ensure that all assets are safeguarded

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Unqualified Supervisor and Management

The internal control that is lacking is the supervision of operations. Without qualified managerial staff, it is impossible for management to exercise their oversight roles over the operations staff (Doyle, Ge & McVay, 2007). The company should bring on board qualified managers who have the technical capacity to supervise the day to day operations of the company as well as make prudent decisions.

Disregard for Early Payments for Discounts on Invoices

The relevant internal control is the supervision of operations. There seems to be laxity among the operations staff that is further compounded by a lack of oversight by management. The company should have in place policies and guidelines regulating the settlement of invoice payments (Doyle, Ge & McVay, 2007). It is against these guidelines that managers and supervisors can carry out physical checks and periodic reviews to ascertain if there is compliance.

Late Payments for Account Payables (Sometimes Due to Lack of Cash)

Overdue account payables are attributable to a lack of cash points to weak internal controls regarding physical audits of cash balances. There is also a weakness in periodic reconciliations which has impaired the company's cash flow management. Subsequently, there is also a weakness in approval authority (Martin, Sanders & Scalan, 2014). The company can remedy this weakness by carrying out physical audits of their cash books to ensure there are sufficient funds to meet maturing obligations.

Relaxed Rules on The Accounting Principles Application

Non-compliance to accounting principles points to a weakness in risk assessment and monitoring. This can be remedied by putting in place an effective internal audit and risk management function to enforce compliance.

Lax in Oversight by The External Board of Directors

This violation can be attributed to poor corporate governance that can be remedied defining the roles and responsibilities of the board members and continually evaluating the board's performance (Martin, Sanders & Scalan, 2014). Shareholders should also consider dissolving the board and appoint a competent one.

Inadequate Control of Supervisor and Management Overrides

These overrides point to a weakness in the supervision of operations by the administration. Controls and approval hierarchies should be put in place, and compliance monitored through an internal audit (Martin, Sanders & Scalan, 2014) (Martin, Sanders & Scalan, 2014).

References

Doyle, J., Ge, W., & McVay, S. (2007). Determinants of weaknesses in internal control over financial reporting. Journal of accounting and Economics, 44(1-2), 193-223.

Martin, K., Sanders, E., & Scalan, G. (2014). The potential impact of COSO internal control integrated framework revision on internal audit structured SOX work programs. Research in Accounting Regulation, 26(1), 110-117.

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Colorado Control Springs Company's Internal Paper Example. (2022, Sep 22). Retrieved from https://proessays.net/essays/colorado-control-springs-companys-internal-paper-example

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