Fact for internal control analysis Cleaning company hires a CPA to handles its accounting matters. the...

Fact for internal control analysis Cleaning company hires a CPA to handles its accounting matters. the company organizes seminar including camping trip on the said. the company pays for seminar and hotel stay, but employees pay for camping trip. The CPA collects money from employees and cleaning company to pay for hotel and camping. the company gave check. employess gave cash following week, CPA did not come to work. No where to be found. All money collected was one million baht. The company records all one million as expense. Analyze effectiveness of internal control at the company.

Expert Solution

MEANING OF INTERNAL CONTROL - The principles and procedures set up by an organization to safeguard it's asset and stop the fraudulent activities. (Especially on part of employees). Basically it refers to all the procedures put up by an organization to prevent employees from stealing and committing fraud.

ANALYSIS OF EFFECTIVENESS OF INTERNAL CONTROL AT THE COMPANY - In above case of THE CLEANING COMPANY is lacks in Internal control, since a newly hiered employee is being trusted blindfoldedly. Which shows ineffective internal control in the above company.

In case of cash handeling, the company can exercise an effective internal control system by authorising one person for cash collection and one person for recording of such transactions, this will instill effectiveness in internal control system.

Moreover, the company can heir a person specially for collecting the cash daily ( from all those who received on behalf of company) and get it deposited in bank that very day.

In above company, there is ineffective internal control system.

ekkarill92 answered 2 months ago

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