Amazon is a multinational company based in the United States, and it is involved in the provision of e-commerce products globally. The other activities that are undertaken by this business include artificial intelligence, cloud computing, and digital streaming. It has several business segments that include North America, there is the Amazon Web Services (AWS), and international. It is the largest online marketplace, and it is known for causing disruptions on the operations of well-established businesses through mass scale and technological innovation. The form closes its books on 31st December, and the recent report is for 2019, and it will be used in determining the internal controls that the organization is using and its accounting control systems.
Components of the Report
Internal control measures are the policies that are adopted by a business to maintain the integrity of the financial statements and the accounting information, prevent fraud, and promote accountability. The implementation of the Intellectual Property Accelerator is one of the measures that Amazon has undertaken to avoid fraud and make sure that all the products provided in its site are not counterfeits. The Amazon Fraud Detector helps in identifying online activities that are not following the company's policies and flagging them. It helps to prevent the creation of fake accounts, and it makes use of machine learning (ML). The firm promotes accountability by inspiring employees to improve their productivity levels. The Supportive Accountability Leadership process is critical, considering that the employees need leaders that can offer them direction on the activities that they are supposed to be undertaken and how they can implement them. The managers are on the front line to handle any arising issue, and they usually offer the workers more positive operations that are relating to the activities they are undertaking.
The other control measure that the firm adopts includes the operation of duties to ensure that every individual working with the entity understands their duties and what they are expected to accomplish. Controlling of the accounting systems is only allowed to be accessed by authorized personnel, and there is extensive use of passwords, electronic access logs, and lockouts (Ye, & Hu, 2020). The Acceptable Use Policy and the auditor's independence are some of the measures that are accepted by the Public Company Accounting Oversight Board (PCAOB) that helps in implementing the company's internal controls.
Management's Responsibility Relative to Internal Controls
The management has a significant responsibility for ensuring that the internal control measures are followed. They must determine the potential risks that are facing the Amazon business, enact their countermeasures, they and make sure that the raised policies are implemented. The monitoring and overseeing of a company's policies is a responsibility that is undertaken by the company directors. It is essential, to ensure that customer privacy is maintained, their security is enhanced, and create measures that will support the trust among the various stakeholders involved in the Amazon business processes. The management is given the responsibility of ensuring that all these measures are working effectively and leading to the realization of the desired objective. The integrity of the accounting information system is essential to the success of a company, and there is a need for the Amazon company management to introduce measures, such as computerized systems, to ensure that it is secure. The records should be maintained in a secure place to make sure that it is not accessed by unauthorized personnel. Lock and key can be used, and the details that are fed to the computer systems and strong systems should be utilized that cannot be accessed by hackers (Yan-ling, 2017). The management should offer reasonable assurance that the transactions are recorded in the right way, they are correct, and can be relied on to make decisions.
Implications of Computer Technology on the Internal Control Structure
Internal audits are usually undertaken to evaluate the effectiveness of the internal controls that are adopted by a business, and this is done by gathering details on the way that a unit operates. It makes identification of the areas that errors happen or points of inefficiencies and making sure that the system that can prevent such issues are installed in a system. The internal audits process determines if these controls realize the desired outcome. Networks and computer systems provide most of the details that are scrutinized during the auditing process. Effectiveness is realized when the auditors decide to use the computer systems as an auditing tool, audit the automated systems and have clear knowledge of the environment in which they operate. Technological systems play a critical role in facilitating the audit administration.
The auditors manage to improve their review of the management systems when they use computer applications, and they manage to increase their productivity. Therefore, computer technology eases the process of audit procedures and tightens the internal control structure. However, there exist elements of weakness that are introduced by the use of computer technology in the auditing process. They are the possibility of information getting hacked by rival businesses or other parties that are interested in the affairs of amazon for their benefit. When crucial data is lost to competitors, they are likely to find measures that they can implement to weaken Amazon's position in the market.
audit tests and procedures
The various audit tests that Amazon audits are likely to use include the audit substantive, risk assessment, and analytical procedure tests. The substantive activities are mainly undertaken by auditors to determine if there are fraudulent activities in a business. The monetary misstatements are mainly unearthed when undertaking this test. Auditors mainly focus on the financial statements and their supporting documents to make sure that they do not have any error. Bank confirmations look at the cash balances, and confirmation letters are sent by external auditors. These documents seek to determine if the payables and the receivable balances provided by the suppliers are in line with the ones in the books of accounts. The risk assessment tests determine how a business relates to the prevailing environment. The auditor mainly seeks to know the internal control procedures. The workers can be interviewed to manage the inspection of the company's records. An audit can observe the employees at the workplace while the paperwork analysis helps in knowing the auditing risks.
The analytical procedures tests make a comparison of the firm's expectations and the recorded details. The test is completed during the planning phase, and it seeks to raise the misstatements in the books of accounts and the evidence to support the operations. Through this test procedure, an auditor evaluates the financial business information by seeking the relationship between the various components of business operations, such as trends and financial ratios. The primary evidence sources under this test include the gross margin calculation and making of prediction of the ending balances, and this is by having a comparison of the predicted against the accounted balances. Therefore, in Amazon Company, these tests can be done with the sole aim of ensuring that the firm is running smoothly, and there are no hindrances that can affect the business operations. Fraud is prevented, considering that it is a significant problem that can affect online businesses.
Primary Information Flows
The information flow in Amazon involves the various stakeholders that are interested in the affairs of the company. The operations of the firm are wide, and the flow of information is categorized into the internal and external levels. The internal flow covers the horizontal movement of details with highly detailed information concerning the various business transactions run in this entity. The senior managers in Amazon rely on the vertical way of offering information and details pertaining to a business and providing instruction on how to undertake their duties. The flow of information in the Amazon business also happens to move out of a company's borders into the external environment. Exchanges can happen between the users in the external environment, such as the government and customers. The company can provide details on the measures that they can undertake to either introduce new policies, raise, or reduce the price of their commodities.
Analysis and Differences between Batch and Real-Time Processing
There is a great difference between the traditional accounting systems and the computerized systems that are being utilized in the present world. In the past, most of the accounting recording was done manually, but the advancement in technology has played a key role in raising the efficiency levels of the transaction process. The traditional systems relied on transactions being recorded in column papers and voluminous binders, but the computer systems keep them in program and computer files that do not require a lot of space. The work of recording transactions has been made easier in comparison to the traditional system. Speed has become a paramount concept that is helping the present-day players to handle many records as opposed to the traditional system. Accuracy has improved with the use of the computerized system, costs are minimized due to the reduced paperwork and labor, while the existence of backups in the computers means that information can be easily retrieved. When using the traditional system, information once lost could not be retrieved, and it was difficult to balance transactions with some of the details missing.
The real-time processing is a procedure that involves the provision of information in a computer when it is continually receiving changing data and undertaking the processing process, ensuring that it manages to control the data source. It is essential to ensure that there is a continuous flow of data so that there is a continuous outflow. Some of the real-time processing examples are bank ATMs, mobile devices, and traffic control systems. The batch processing systems involves providing information in groups with no user interaction needed when the processing is happening. The procedure is suited for end-of-cycle processing, such as the processing that involves the banking reports at the end of an accounting period. One of the significant differences between the two processes is that an administrator can manage to postpone the batch processing, but the case is different with the real-time processing that is expected to happen immediately. The time that happens when a user input data and a computer process is known as the response time, and the real-processing strategy has predictable response times.
A successful output seems to be timely and accurate. When the processing activities have a deadline, they are regarded as real-time. However, wit...
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Essay Example on Amazon: Disrupting E-Commerce, AI, Cloud, and Digital Streaming. (2023, May 23). Retrieved from https://proessays.net/essays/essay-example-on-amazon-disrupting-e-commerce-ai-cloud-and-digital-streaming
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