Reference no: EM132519470
FNSACC516 - Implement and Maintain Internal Control Procedures Assignment
The Accounting firm - The firm of Bracken Ridge Accounting Services is a prominent accounting firm based in Bracken Ridge. The firm provides financial accounting, business planning and auditing services. You are a member of the management team and specialised in establishing internal control systems.
The Client - Mr Smart who is the Managing Director of North Point Ltd asked you to establish an internal control system for the his business. The business, North Point Ltd, manufactures and sells compact disks.
The Brief - Your first task is to evaluate the internal control system and prepare a report to be presented to the Board of Directors.
In your report -
Evaluate the existing internal control system of the client's work, environment and prepare a flowchart,
Determine the weaknesses and strengths of internal control system,
Explain the consequences of the weaknesses of internal control system,
Make recommendations how the weaknesses of internal control can be rectified,
Prepare an amended flow chart of the basis of recommendations,
Draft a letter of management to be forwarded to the management of North Point Ltd by the end of week 9 of your studies listing the weaknesses, consequences and state the changes that you would recommend for the system to improve internal control.
Include a schedule that sets timelines for implementation of your recommendations.
Guidelines for the preparation of your assessment -
1. Prepare flowchart
Prepare a flowchart using either flowcharting software or an excel spreadsheet for each subsystem.
If you chose to use excel, click on insert option on the ribbon and click on 'shapes' on the toolbar and copy and paste the shapes you want to use in the flowchart. See below for a sample flowchart.
2. List primary and specific objectives of internal control
List the primary and specific objectives of internal control for each cycle.
For example: 'The primary objective of internal control within the purchases and accounts payable cycle is to ensure that the entity accepts liability only for the goods and services that it has purchased and that are necessary for its efficient operations.'
3. Evaluate the internal control system
Review the Case Study information and use reflection on the primary and specific objectives of internal control you have identified in 2 to evaluate the internal control system and make recommendations in the following manner:
Weakness: The technicians can enter the computer system without supervision.
Consequences: Technicians may alter the system for misappropriation purposes.
Recommendation: Every activity must be authorised and a log book must be maintained for every activity by the technicians.
Ensure that the weaknesses, consequences and recommendations are numbered.
4. Prepare amended flowcharts
Copy the flowchart that you have prepared after the evaluation to another sheet.
Amend the flowcharts on the basis of your recommendations.
5. Covering letter to management
Provide a suitable covering letter to management outlining the principles of internal control and auditing, and summarising the findings of the internal audit. Include a recommended schedule for implementation.
Attach the documents you prepared in steps 1 to 4 above.
Attachment:- Implement and Maintain Internal Control Procedures Assignment File.rar