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Your assignment is to prepare and submit a paper on internal control system evaluation of ethnic store ltd.
Your assignment is to prepare and submit a paper on internal control system evaluation of ethnic store ltd. Moreover, auditors instead of auditing the accounts for errors and fraud only, prepare the accounts too, which is a blunder in itself. Not only this, but Edward also does not take complete responsibility as an owner to run the business, rather, but he also leaves the business activities upon the shoulders of his employees who can mal-perform because of the absence of accountability from the top management.
Edward has failed to identify the fact that the management of a business has to set various rules and procedures, which the employees and employers have to remain adhered to. Such policies, rules and procedures lay out the guidelines for carrying out different activities in a business ranging from operational to long–term decisional activities. First all of all, Edward did not focus on the effect of employees’ performance on the overall business activities. He hired part-time employees with lower quality skills and managing abilities. Moreover, the business does not follow specific procedures to keep a check on employees’ weekly performance. instead, employees themselves fill in the sheet and submit it for approval. There is no standard payment procedure as well. they are supposed to get checks for their wages but in case of haste, they are given the salary in cash form too.
Most importantly, Edward has ignored the need of having a managed and scrutinized system of keeping records and documentation for his business activities. It is evident from the observation that no records are maintained for inventory and cash management. His employees do not record the amount paid for goods or quantity of goods delivered, rather simply count the goods and ask the accountant to pay for the goods. Such a practice is not only harmful in short-run but also in the long run, because, they can let go theft unchecked in the day to day .activities, where as in the long run, any strategy regarding inventory management will not be easily devised, because of the absence of prior records. .
