Question

Nenemin Tendiri” Co operates in a bakery industry for five years. There are some internal activities which   waits fort the resolution. Overtime sheets are completed by the employees themselves. Accuracy of these sheets are not checked by authorised person. There is one HR specialist who completes clock-in and clock-out times of the employees and calculates salary with their statutory deductions. This information afterwards submitted to the Accounting Department.

There are number of gaming boxes and games in the company’s inventory. Everyone inside the company may easily access to these games.

Required: Explain defficiencies in Internal Control and explain their possible consequence. Provide control activities to overcome these problems

Answer 1

Answer)

Here,The internal controls deficiencies are First one the employees may write the overtime sheets more than what they worked and hence there is scope for disguised unemployment as the production may be less and wages to be paid may be high.Second one is the gaming boxes can be misappropriated by anyone if the outgate security doesn't check the employee properly.There is also chances for goods unintentionally got damaged by one person and no one would be aware about who did that.

Internal controls:

The company need to appoint a person to see the HR related jobs for getting accurate details for salaries,bonus etc and there must be. Some man or machine allocated duly for attendence purposes.Similarly,the access inventory should not given to all but only for who is in need to access it.Moreover a guard or so should be there to allow the eligible persons inside and bin cards are to be maintained for seeing what quantity of raw materials taken by employee for production for which segment for preventing unathorised access and misappropriation of inventory.