Accounting Case
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As a representative of my accounting firm, I want to thank you for allowing us to assist you with your concerns about internal control and security within your company. So I would like to start by making a few suggestions that will increase the protection against your companys assets. I want to suggest that you review the objectives of internal control practices. The objectives would be to first guard and protect the assets of the corporation, improve accounting methods; increase the efficiency of the corporation and by making sure that the following principles are being is being executed.
Establishment of Responsibility – Setting clear expectations of your employees and making sure.
Segregation of Duties and Segregation of Record Keeping – Making sure that no single individual remains unchecked by others in his or her activities, and that the same people responsible for certain actions are not also solely responsible for recording those actions.
Documentation of Procedures – making sure that the expense reports are accurate and that original receipts are used for proof.
Physical Controls – in order to safeguard property against theft and vandalism.
By following these principles you will start to see great improvements. Now lets take a look at some of the information you have provided us with. Looking back at the concerns you have provided, it seem like you have a lot of trust in your employees which is good, but may not be in the best interest for your company. Referring back to the first principle you need to establish certain duties to certain people. Each person should only be responsible for certain task. Relating back to the first principle we suggest that your Treasury Controller should have some of his duties divided. Due to the fact that he is responsible for both making and documenting purchases, it sort of discards against the first principle. We have been aware of situations like this where they are abused, and can produce fraud , where the accountant may make personal purchases and falsify the records to either not reflect the cost at all, or to reflect the cost as the overstated cost of a totally different asset. With that being said, may I suggest that you hire a bookkeeper or assign these duties to another individual. Your treasurer can still be responsible for the companys purchases, but hire some one else to keep your records.
The second problem I see is that you have too many people handling the petty cash drawer. As you look at principles three and four, which states the documentation of procedures and physical control, I believe that you should restrict the access to the cash drawer to a specific employee only, and all other employees who make purchases, should get the cash from that particular that is in charge of the petty cash drawer.