Posted: February 19th, 2022

Role Of Internal Controls essay

Overview
Internal controls are methods and strategies used to keep information and inventory safe from theft and to easily tell if something is compromised or missing. In this assignment, you will recommend internal controls for safeguarding inventory from an accounting perspective and explain which financial statements are affected by missing inventory.

Scenario
One of your friends has opened a new wholesale electronics business and wants your help figuring out some inventory issues they are facing.

One night last week, there seemed to be fewer HD televisions in the warehouse than they expected. The last time they were in the warehouse was a week earlier, and they hadn’t noticed anything amiss.

As they looked around, they saw that the evening warehouse worker was filling the last orders of the day. The delivery driver and day warehouse worker were gone for the day, and the delivery van keys were on the desk that the warehouse workers shared. The doors to the loading dock were open, as was the door to the office area where the accountant, two customer service specialists, and the owner worked.

Knowing that you are familiar with accounting principles, they asked for your help in figuring out how to prevent this in the future.

Prompt
Based on what you have learned about internal controls, provide recommendations on what controls the business owner should put in place to prevent loss of inventory and ensure that any losses are reported immediately. Also, specify which parts of the financial statements are affected by these losses.

Specifically, you must address the following rubric criteria:

Role of Internal Controls
Explain the role of internal controls in business settings. Also explain how not having internal controls in place may impact the accurate analysis of any wrongdoing.
Recommendations
Recommend at least two internal controls that should be put in place to prevent inventory from going “missing,” noting any assumptions you are making about the root cause of the missing products and how your recommendations will help address them.
Recommend at least one control that should be put in place to alert the owner if something is actually missing.
Financial Statements
If you found that two $400 HD televisions were missing, explain which financial statements you would correct and how. Be specific as to accounts and amounts.
Guidelines for Submission
Submit a 1- to 2-page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style.

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Overview
Internal controls are methods and strategies used to protect information and goods from theft and to detect when anything is compromised or missing. In this assignment, you will offer internal controls for inventory safeguarding from an accounting standpoint, as well as describe which financial statements are impacted by missing goods.

Scenario

One of your pals has launched a new wholesale electronics firm and would like your assistance in resolving some inventory concerns.

Last week, there appeared to be fewer HD televisions in the warehouse than planned. They hadn’t been in the warehouse in a week and hadn’t observed anything out of the ordinary.

As they looked around, they noticed that the nighttime warehouse worker was filling the last of the orders.