Question

You have decided to open a bookstore that sells textbooks and competes with the campus bookstore. List one internal control procedure you would implement in running the store. Do you feel there are any limitations to this internal control procedures? If so, what could be the limitations?

Answer 1

Internal control in an organisation are such controls which are implemented to limit the access of the employees to the company's assets. These controls are implemented by the company's management as a part of securing and protecting company's assets.
These controls while protecting the company's assets also saves company's records, accounting data, cash and other assets too.
Internal controls are of many types and these includes the access restriction, locks, physical security barriers, surveillance equipments (cameras) etc.
Internal controls are implemented to ensure that things are running well and company have no issues.

Running of bookstore would require an internal control which would prevent or minimise inventory losses, minimise unnecessary expenses, prevent cash pilferage etc.
It would require such a system which would stop employees and customers from committing theft on fraud.
Such a system of internal control can be implemented by installing surveillance equipments (cameras), which would monitor every activity of the store employees and customers.
It will also help in analysing whether all employees of stores are working properly or not. Surveillance equipments would also stop cash pilferage and loss to other assets.

With the advantages of this internal control system they are also certain limitations.

These are as follows :-

• Installing surveillance equipments would require additional costs.
• Physical protection of the surveillance equipments is also required.
• Additional employees and maintenance cost of surveillance equipments are also required for maintaining this internal control.