Internal control is a process that designed to help the organization to accomplish specific objectives or targets by ensuring the reliability of the financial reporting and operated effectively and efficiently. As an internal auditor of Goodner Brothers Inc, I strongly believe that an entity should have enough personnel to maintain a proper segregation of duties to prevent misstatement and fraud. In this entity, the sales representatives are allowed to access, review and even update the details of the customers’ account which not supposed to happen.Moreover, Goodner’s Huntington sales office should have clearly states that requirements for proper documentation and audit trail before processing transaction. As mentioned in the article, sales representatives often record the transaction details on a piece of scrap paper instead of completing proper documents like purchase orders, memo and other accounting documents on a timely basis. The book keeper will just directly enter the details which don’t consist of proper format and authorization into the accounting system.
Besides that, Goodner’s Huntington sales office should limits the access to the inventory storage.Only those who are in duty of the inventory storage have the authority loading the goods. Whereas, sales representatives must go through the person in charge to load the goods before delivering them. It is because it is easier to keep track of the inflow and outflow of the goods. Lastly, independent reconciliation of inventory is needed to avoid any conflict of interest and fraud.
As mentioned, proper segregation of duties are needed. The person who in charge of sales is not allowed to involves in any activities in the inventory storage. In this case, it will definitely prevent fraud conducted like what Woody