Question

Ms. Sana is an accounting head in the Head office of Oman Steel Factory. The Oman Steel Factory is heavily dependent upon sales from construction and building companies . Sana failed to do proper recoding and documentations of (requisitions of assets, purchase orders without quotations, invoices and vouchers without supporting documents, and some expenses without official receipts). Further, the salary scheme of their employees did not match with their qualifications and skills. All of these issues were discovered during the audit for the first 2 quarters of 2014 and these lead to the losses of the company.

Based on the above scenario

1. Determine and design 3 internal control systems needed by of Oman Steel Factory to resolve the cited issues in the case. -

2. Prepare an audit program for Oman steel Company starting July 2014- December 2014. (

Answer 1

1.

There are three internal control system which must be applied to every organization for the smooth functioning of the firms like

-Detective

-Preventative

-Corrective

THESE INTERNAL CONTROL CHECKS ARE TO BE IMPLEMENTED FOR THE BETTERMENT OF THE ORGANIZATION FIRST IS TO DETECTIVE OF THE ERROR,so that starting of the error are easily found and help to detect at the early stage of the fraud

second point is to preventive the fraud that not occurs again and again and helpful for the betterment and the third stage is corrective the error which is already committed and steps for the positivity of the action and also win the confidence of the worker and staff of the organization.

So, for these three measures these are the steps to be followed fro better controlled

2.

Audit Program

It is an also known as Audit plan. it is an action plan that the auditor and its team follow during the audit. when the plan is prepared then allocation of the duties and the responsibilities if fixed regarding the audit by an auditor and the steps to be followed for the team to executive the audit as per the plan prepared.

Plan is prepared to check

-Assets are requisitions with the preapproval of the concerned person or authorities

-Before acquisitions of the materials, or anything first quotation are to be invited or not

-If quotation are invited then comparison are made are not , that to give order to those suppliers whose quotation are less and comfortable with the company policy.

-Invoices and vouchers must be attached with the proper supporting document and all details must be matched

-Any expenses relate to the office must be receipt attached otherwise losses are increasing and difficult for the company to meet their income with the expenses.

-Qualification and the salary must be matched

-Salary with the experience must be matched

So, These plans are prepared and executive for the betterment of the organization, and duties of audit team be fixed like some member check the assets acquisition ,, some match the purchase and invoices with the supporting document, some check the salary to qualification and experience, some checks the quotation before giving final purchase order to the least cost supplier.

So, aim behind is to fulfill the wants of th employer or owner to detect error and fraud in the system and also take steps to prevent from them in the future.