Question

dentify and discuss the six principles of control activities. Suggest the two most important principles for an online retail business versus a brick-and-mortar retail business. Provide support for your rationale.

Answer 1

Six principles of Control activities:

• Assignment of responsibility: Employees will be held accountable for the tasks assigned to them.
• Segregation of duties: No single employee shall handle the assets as well asaits records. Hence segregation of duties helps to maintain check and early detection of error and fraud.
• Documentation: The work flow and the internal control policies and procedures shall be properly documented and maintained with authorised persons in the ogransiation.
• Implementing physical controls: Assets and records held by the company shall be provided with all sorts of physical controls to prevent unauthorised access and usage by any persons.
• Independent verification : Both assets as well as its records shall be subject to periodic verification from people who are independent with no conflict of interests.
• Human resource controls : Employees shall be subject to job rotations, supervisions and background checks. Ethical awareness among employees is also essential.

Control principles in Online retail Business:

• Assignment of responsibility: Often employees, vendors and buyers connect remotely, via Internet responsibility should be clearly assigned
• Segregation of duties to ensure visibility of work of other person.

Control principles in traditional business model:

• Human resource controls
• Physical controls.