Question

Adriano now feels that he is almost ready to start setting up his dance teaching business, however, there is only one more issue he is concerned about. Adriano will be investing a significant amount of his time, efforts and money into opening the business and he is worried whether his business will perform according to his expectations and be a viable venture or not.

Adriano is almost ready to start setting up his dance teaching business, however, there is still one more issue he is concerned about. Adriano will be investing a significant amount of time, effort and money into opening the business. He is worried that the business might not perform to his expectations and he knows that there are many risks involved with starting your own business. He is also uncertain if he has sufficient funds to start the business.

6) Outline the internal controls Adriano will need to have in place to meet possible emergencies.

Answer 1

If Adriano start his dance teaching business following internal control are needed:-

1) organisational structure :- adriano should ensure that he has a proper organisational structure so that no individual can overwrite the control system

2) segregation of functions:- there must be segregation of task between all individuals. There must be no conflict or confusion among employees regarding their jobs.

3) management supervision :- management is responsible for devising and maintaining the system of internal control. He should make sure that the management of his dance tution is efficient and effective.

4) personnel :- the proper functioning of any system depends on the competence and honesty of those operating it.

There must be proper allocation of duties among his employees. There should be one department who will ensure if sufficient funds are available or not. Those who are collecting fees from students must not be permissible to access the books of accounts. There must be a separate department who will ensure that all the students has paid their fees on time and so there is no bad debt.

Hence, if Adriano implement all these internal control effectively and efficiently , he will be able to cope up with the emergency and will able to exploit the opportunity available in the market.