Internal Controls for Cannon Pty Ltd- myassignmenthelp.com

Question: Discuss about theInternal Controls for Cannon Pty Ltd. Answer: Strengths and weaknesses in the internal controls of Cannon Pty Ltd The internal controls of Cannon Pty Ltd does not have clear daily operating procedures that are meant for the cash receipts. This is one of the weaknesses in the internal controls of the cash receipts. The company relies heavily on people who are the sales representatives to get cheques from customers. The problem with this is that the cheques can be easily misplaced which is a big problem to the company (Graham, 2008). Another weakness is that a lot of roles have been delegated to the credit control clerk, that means that there is no proper separation of duties. For example, after receiving the checks, she is the one who is responsible for crossing them so that they can be banked, she the enters the cheque details into the system then she prints the daily report afterwards. This means that if she makes an error, no one will be able to know that an error has been made. She also handles the banking part of it as well as preparing the bank slips. The company should delegate some of these duties to another person in the finance department to ensure that there is accuracy in the process, someone to countercheck. Another weakness is that it clearly shows that the company has not put in place measures to ensure that there is timeliness of payment by the customers. Some of the strengths of the internal control system is that the company makes daily cash receipts reports this means that the reports are always up to date. Implications of the weaknesses segregation of duties: the various duties in cheque handling should be performed by different people. There should be no instance where one person in the company handles all those duties. The implication of this weakness is that the company will deal with so many errors and also there is the risk of many more errors occurring. There is also a risk of fraudulent activities in the cash receipt system when the company allows sales representatives to receive payments on the companys behalf. Payments in cash or cheques should be received by specific people which minimizes the risk of fraud in the company (Montgomery, 2013). The company relies on mostly manual accounting system instead of an computerized accounting system. The imp0lications of this weakness is that there are a lot of errors that are made by manual accounting system. Assessment of internal control for cash in Cannons cash receipt system The Internal Control of cash is aimed at reducing errors and losses within the Organization, comprises the following accounts. Here are some of the internal control measures you can take to reduce these errors:You must take a strict control over the collections made by the collectors, who at the end of the day they deliver the money received from the client along with uncollected bills. It comprises a whole series of administrative measures, so that certain operations are executed by two or more persons, with the deliberate purpose of avoiding errors, hinder eventual malicious handling and detect irregularities in time. In principle, it is relatively easy for a single person to commit fraud; but when it has to act in conjunction with another person, who controls it, it is more difficult; making the possibility more remote, the greater the number of people involved (Wong and Ho, 2006). There is a fundamental principle of "internal control of cash", which requires that the functions of management of the same are made by people other than those who are responsible for their registration. This principle must be completed with that of labor, which executes a person, be formally verified and controlled by another person. In short, the fundamentals of internal control of cash can be summarized in the following principles: a) That the person who handles the "Cash"; whether it covers, or pays, does not has access to the accounting records thereof. b) Conversely, whoever registers operations with the "Cash" does not have access to the money. c) Split the work between several people, so that any error, omission or fraud can be discovered in time; and that, in order to commit the latter, there must be collusion of several persons. d) Whoever covers, does not be the same one who pays. e) That all money, which enters the company, is in its entirety deposited in his account bank. f) All payments, absolutely all, are made by checks. Only the small payments are made in Cash; but through the g) Whoever collects, should not be the same person who issues corresponding receipt, and must be another person, who carries out the respective accounting record. References Graham, L. (2008).Internal controls. Hoboken, N.J.: John Wiley Sons. Montgomery, R. (2013).Auditing. [Place of publication not identified]: Theclassics Us. Wong, L. and Ho, T. (2006).Auditing. Hong Kong: Hong Kong Institute of Accredited Accounting Technicians.