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Internal Auditors Article On Goodner Brothers

Internal Auditor's Record on Goodner Brothers Inc

1. 0 Internal Control is something of checking amounts and it is designed to provide a reasonable assurance that resources are protected. Then, accounting data must be appropriate according to the information of accounting. Functions should be useful and also law and plans are put together with. Because of this company (Goodners Brothers), We known that weaknesses in interior control of the company make staff of this company, Woody Robinson was at serious financial trouble. So, the employee took benefit of his company's weakened internal handles by stealing a huge of inventory, which employee then sold to other get-togethers. We see that the action of Woody Robinson was a kind of major fraudulence. However, We have mentioned below that the main key inner control targets for Goodner's Huntington sales office. We also stated that the key inner control weaknesses and its own implication that were visible in Huntington unit's businesses and control guidelines or procedures to ease the key inside control weaknesses. On the other hand, We also mentioned that other get-togethers besides Woody Robinson who partly responsible for inventory loss in the company together with few scam risk management strategy that might be implemented by this company.

2. 0 From this case, we have found that Sales Representative(Woody Robinson) in Goodner's Huntington sales office took as an good thing about Goodner Brothers Inc poor in internal settings by stealing a huge amount of inventory. So, We assume that this are the following key inside control aims should be maintain in Goodner's Huntington sales office. First of all, Sales office's personnel need to ensure that the every deal should have an effective authorization to avoid this kind of fraudulent use of resources. For example, Sales office's staff should get the approval from the management or supervisor for very orders. By apply this first target, the shortages of inventory can be reduced and makes all the trades going very effortlessly. Subsequently, Physical safeguards and security should have been the main element internal control objectives. For instance, sales office's staff must ensure that access to physical property and information systems need to be handled and properly limited to authorized personnel. Alternatively, validity also should have been the main element internal control objective. So, sales office's staff need to ensure that all noted transactions fairly need to be represent the economics events that actually happened and also should be executed in accordance with management's standard authorization. Next, Error in handling also should have been the key internal control goal. So, sales office's personnel need to ensure that whatever problems discovered at any level of processing receive prompt corrective action and also should reported to the correct degree of management. Next, Completeness also should have been the key internal control objective. So, sales office's staff need to ensure that no valid deals must have been omitted from the inventory details. This five aims that we explained overall can minimum the debt. Furthermore, good control can minimized or maintain of the inventory data.

2. 1 On the other side, we've identify the key inner control weaknesses and that were visible in the Huntington unit's businesses. Firstly, you can find lack of sufficient personnel in the business to execute the much needed various job because we see that the business have 14 sales outlets with skeletal crews of 10 to 12 employees. Then, a sales supervisor supervised the other employees at each electric outlet and also working a sales region. The remaining personnel typically included two sales consultant. Furthermore, a receptionist who having double job as a secretary and also as a bookkeeper and seven employees who providing the tires and working in the unit's inventory warehouse. So, this shows clearly the particular one of the major key inside control weaknesses is insufficient of employees is working in the business. Next, another key inside control weaknesses in the Huntington unit's businesses is the inability to coordinate an up-to-date accounting system used to provide an actual or appropriate consideration of inventory because we was see that each goodner sales outlet keeping a computerized accounting system. These systems also typically made matching to a standardized format and not develop for specialized for the business. These systems is ready made. Beside this, we also found that the unit's sales manager and two staff had unrestricted access to the accounting system. So, since the large volume of sales and buy deals always swamped the bookkeeper. Then, sales staff also frequently moved into transactions straight into system. Furthermore, another key inner control weaknesses in the Huntington unit's procedures is having less security had a need to safeguard the possessions sold. Company inability to constrained the security. We've see that the sales representative (Woody Robinson) taking an advantage and regularly stole the inventory and placed the proceeds. Woody Robinson also carrying on stole in a variety of ways. In some cases, Woody Robinson charged merchandise that he was sold for his own benefit to the accounts of large quantity customers. So, this techniques makes inventory balance in the Huntington facility's accounting data. We also identify that Woody Robinson billed the clients for merchandise that they had not purchase. Goodner's customers frequently went back tires for various reasons. We discovered that Woody Robinson completed all the credit memos for sales ventures voided by his customers and at the same time, Woody Robinson not coming back the auto tires to Goodner's inventory. Then, Woody Robinson also regularly sell a few of the wheels to some other clients for cash. So, because of company lack of security needs to safeguard the resources sold. This makes the quantity of stealing auto tires made Woody Robinson was increasing very high. Next, another key inside control weaknesses in the Huntington unit's functions is the company failure to make certain that the accounting information was correct or not. We have identify that the sales representative themselves consistently accessed, researched and up to date their customer's account and also completing purchase orders. Sales purchases, credit memos and other accounting document on the well-timed basis, Furthermore, the sales representative handed down all the documents to the bookkeeper and also use them to enter the transactions directly into the accounting system. We likewise have identify that sales representative possessed direct access to the inventory storage areas and during heavy sales times, sales representative always loaded and shipped customers purchases themselves. So, this makes easily mistakes occurred in the accounting information. So, we have stated those key internal control weaknesses and its own implication with the evident in the Huntington unit's functions.

2. 2 This are the following control guidelines or procedures to alleviate the key interior control weaknesses. First of all, Proper authorization of orders. Creating and using costs is a form of authorization. This makes easier for Huntington unit's functions. The purchase of goods and services should be requested by one person and approved

by another. People that take care of cash should be bonded. Secondly, another guidelines or steps is Segregation of tasks. This consists of assigning differing people the tasks of authorizing trades, recording trades, and maintaining custody of assets. The person collecting cash should not be the person who records the money receipt. If there is enough staff, a rotation of obligations can eliminate employee

manipulation of details or property. The agreement of purchases should not be made by the person who has usage of the inspections. Furthermore, another procedures or techniques is design and use of satisfactory documents and files to help ensure the correct recording of deals and happenings. Sales representative should pre- numbered inspections, receipts and purchase orders should be utilized and sequence should be accounted. Then, terminated bank checks, vouchers, and receipts should be looked after. Voucher deals (invoices, purchase orders and receiving reports) should be cancelled (stamped paid) after repayment to prevent duplicate obligations. The invoices should be matched up to receiving reviews and receiving studies should be matched to purchase requests to ensure that sales representative received, ordered and only pay for what we received. At the same time, journals should be stored for all transactions. Next, another plans or strategies is enough safeguards regarding usage of and use of possessions and data. Then, access to blank checks, personal plates, and purchase orders should be limited. Computers must have passwords to gain access to and change information and working area also should be noticeable to supervisors. However, voided assessments should be defaced by tearing the personal lines off or writing void on the face of the check and also all voided inspections should be maintained. If the business apply those policies or types of procedures that we explained. The weaknesses of key internal control will be better.

2. 3 Furthermore, We also see that besides Woody Robinson, you can find few get-togethers were partially responsible for inventory deficits goodners endured. Customers is one of the get-togethers responsible for inventory losses since when customers complained to Woody Robinson to be charged for merchandise that they had not purchased, Woody Robinson usually apologized and corrected their profile amounts but if a few of the customers sometimes paid the illicit charges, so this demonstrates customers unknowingly helped Woody Robinson maintain his fraudulent system. Next, We identify that Felix Garcia, the Huntington sales manager is also one of the functions that in charge of inventory losses because Felix Garcia explained that he was not discussed the clients issues with Woody Robinson or the sales consultant. Normally, when Felix Garcia received a customer complaint, he just simply passed it to the appropriate sales representative and was allowed that individual to cope with the concerns. Furthermore, We also discovered that Felix Garcia maintain a document of customer problems only because he was told to do so by the previous sales director whom was changed three years earlier. So, We found that previous sales supervisor also partially accountable for inventory deficits. Next, Al Hunt is owner of Curcio' wheels and also Woody Robinson's friend is also one of the people responsible inventory deficits because Al Hunt just continue choose the tires even though another sales representative advised that the company only sold closeout goods right to wholesalers. Al Hunt also know that Woody Robinson was amazingly selling the wheels at lower price. This implies that Al Hunt really responsible for inventory losses. We also see that Al Hunt one of the major gatherings one of the other people who responsible for inventory losses.

2. 4 However, there is a various varieties of scams risk management strategy that could be integrated by Goodners Brothers Inc. Among the fraud risk management strategy is communication and training. So, elevating employees' knowing of their obligations pertaining to fraudulence and misconduct control commences with communications and training. While many organisations take an approach, careful planning behind this work can help send employees a message to take their control duties seriously. Subsequently, another scams risk management strategy is audit and monitoring. Because since it is impossible to screen every fraud and potential misconduct risk, management should develop a detailed auditing and monitoring plan that is based on the organization's scams risk assessment process. Then, another scam risk management strategy is worker and third-party homework. A significant part of a powerful scam and misconduct protection strategy is using appropriate homework in the hiring, retention and campaign of employees, agencies, vendors and other third functions. Such due diligence becomes especially important for those employees with power within the financial reporting process. Furthermore, another scam risk management is code of carry out. That's actually a proper -written code of carry out is one of the most crucial mechanisms to communicate with employees about satisfactory business specifications. It sets the organization's firmness on control culture, increases awareness of management's commitment to integrity and provides the resources to help employees achieve management's conformity goals. All those fraud risk management strategy that people stated that can applied by Goodner Brothers Inc.

3. 0 Finally, we come with realization that the management or the panel of this company is principally responsible for the look of interior control and conveying to staff their interior control responsibilities. Peoples is the main one who make inside adjustments work. Everyone in the company takes on an important role. As problems are mentioned, staffs should be communicated, so that modifications or corrections can be produced. There may be few benefits associated with inside control mainly for employees is really to help prevent problems and irregularities from developing. If indeed they do happen, Internal controls will help ensure they are simply detected in well-timed manner. By this statement, we thought that the plank of Goodner Brothers Inc is should be able to overcome the inner control weaknesses. It creates the fraudulent in the company will be reduced and especially Huntington sales office can be preserved or sustained regularly rated as Goodner's second or third most profitable sales shop.

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