Question

The profit margin of a large corporation has been steadily declining. Management is convinced that this is due to theft, wastage and inefficient amount of employees. As a consultant, write a report to management. In the report, include the internal control measures that could be put in place to turn things around financially for this company.

Answer 1

TO: The Management

FROM:Consultant

The report is related to profit margin is declining and management is considering that it is because of theft,wastage, and inefficient amount of employees.

the following internal controls should be followed so that company becomes financially viable.

1)Establish a code of conduct.

It is a statement that you will not tolerate unethical or illegal behavior toward anyone—customers, suppliers, employees or the company itself.

2) Set up organizational checks and balances

In a small business,multitasker is a solitary administrator/bookkeeper who opens the mail, handles deposits and payments and files transaction documents. No one person should control that many aspects of the business. set up an operation in which one person controls what comes in (cash, checks, merchandise, supplies) and another handles what goes out (payments, orders, finished products).

3)Institute policies and procedures

By making policies that in which every transaction checked at each level, in case payroll prepared and authorized by HR but entered by accounting, then checked by management before the funds are sent to the payroll company is a way to rein a fraud .

4)Watch employees’ behavior

Checking that employees are working according to the plans made by a company and to attain the objective of profit maximisation. Regularly communicate updates and reminders of policies and procedures to staff through emails, staff meetings and other communication methods.