RNS Audit Program - Essay Sample

Introduction

Internal control is the process adopted by a company's board, management, and other personnel to assure the achievement of reliability in financial reporting, compliance with applicable laws and effectiveness and efficiency of operations (Whittington & Pany, 2001). Internal controls present methods by which the senior management delegates authority and assigns duties and responsibility to confirm the efficiency and effectiveness of operations and reliability of financial reporting, it is a process, not an end.

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Robins Network Solutions (RNS) will achieve internal controls through the implementation of 5 components including; Control Environment, Risk assessment, Control Activities, Information Systems, and monitoring of controls. The components are vital to RNS in the achievement of Internal Controls as a means to the attainment of the business objectives in the plan.

Control Assessment for activities at RNS is crucial. Control Environment is the component that sets control consciousness of the organization (Whittington & Pany, 2001). Integrity in an organization and ethical issues along with a commitment to perform with competence, Philosophy of the management and it's operating style, how the organization is structured, and human resource policies and practices are some of the issues addressed under control environment. RNS has plans of overcoming the difficult economic times predicted by starting production of their software, aggressive marketing, introducing new credit terms which will be achievable through an environment that exhibits control.

The upcoming audit should ensure the Human Resource (HR) department has the proper policies which promote competence and strong enough to support the growth, a management style that emphasis, integrity and ethics and an overall organizational structure that will be able to oversee the achievement of the objectives.

Risk assessment, on the other hand, is the process by which the management identifies and responds to business risk (Whittington & Pany, 2001). Auditor's role in checking and confirming the applicability of the means the management is monitoring and responding to risks. RNS' accounting policies should include efficient and effective financial recording and reporting processes that follow accounting standards. Accounting information systems should provide that to the auditors.

Accounting Information Systems will provide the information at all levels in the organization to assist the management in meeting it is objectives (Whittington & Pany, 2001). The system shows methods used to capture and record financial transactions, process, summarize and report the transactions which are what the audit will seek to reveal. A manual of Accounting Policies and Procedures is a tool that RNS Accounting department should possess to guide the recording of its transactions.

Control Activities are policies and procedures that RNS should implement to ensure the management's directives are carried out (Whittington & Pany, 2001). Some of the control activities that RNS should have in place include; performance reviews, physical controls, Segregation of duties, and information processing controls (Whittington & Pany, 2001). RNS' expansion plan at a time when the dismal performance of the economy is expected to dismal will call for a visible information processing controls for accounting processes to ensure financial reporting is accurate for proper decision making by the management.

Monitoring controls is another component of internal controls that an Audit seeks to check. Monitoring assesses Internal Controls to ensure they are operating as intended and advise whether any modifications are necessary. Monitoring of controls is a continuous exercise which the management should conduct through activities like continuous of customer complains, reviewing financial statements. The above functions, the organizational structure should factor in an audit committee that will oversee the internal audit's functions. The External audit plan and objectives will be shared and approved by the audit committee, and the audit report will be shared and discussed by the same department before being presented to the entire board.

References

Whittington, O. R., & Pany, K. (2001). Principles of Auditing and Other Assurance Services. Boston: McGraw-Hill.