Internal Control Auditing
Integrity and ethical values
Integrity and ethical values can be seen to be well present in XYZ. All the staff members are well cooperative and there is an atmosphere of trust and reliability among the staff notably among Tim, Bill and Day. Everybody has a clear perspective of the ethical values and follow the company systems properly. There is a moderate control environment on the basis of integrity and ethical values among the members of XYZ.
Commitment to competence
The company has a systematic procedure for ensuring that the efforts of the entire workforce are inclined towards meeting the overall business objectives. Tim takes care of the supervision and training of the workers while Bill supervises the sales function in coordination with Mr. Day; Office Manager. The company follows standardized job rates or negotiated based on consent of the owners. There is accounting system to record each job commitment and ensure its completion. This shows a moderate to strong control environment due to commitment to competencies.
Board of Directors
The Directors; Bill and Tim hold monthly office meetings with the staff in order to ensure all the employee related and other operational matters that need to be resolved are all addressed properly. These tend to provide a moderate control environment.
Management philosophy and operating style
The management philosophy and operating style is pretty much in line with the company objectives and aimed at reducing any work lags, incompetency and mismanagement. One flaw in the operating style is with regards to the recording of receivables as the staff has had problems with the recording and there is weak control system with regards to recording of the receivables. Therefore, from the view that we get from the initial interview, XYZ holds a weak to moderate control environment with regards to management philosophy and operating style.
Organizational structure
There is a well defined organizational structure with the proper supervisory soles assumed accordingly by Tim, Bill and Day. Time takes care of the working staff, Bill and Day take care of sales team and other office related matters. This provides a moderate to strong control environment.
Assignment of authority and responsibility
In line with Bill’s instructions, each staff member is assigned with authority and job responsibility in accordance with their competence to be able to complete it. Therefore, this predefined principle for assigning authority and responsibility may offer a moderate to strong control environment.
Human Resource policy and procedures
The workforce after being recruited is properly trained by Tim, Bill and Day according to their assigned job roles. Any issues relating to employee matters are taken care of in the monthly office meeting that is held every month. On job training and “open door” policy for employees’ queries provides a moderate control environment.
On an overall basis, XYZ Company’s control environment can be assessed on the basis of of the evaluation of various key factors and elements of a control evaluation. All these elements are integral to give up a final recommendation in this regard and based on our overall impression, we can demonstrate that the company had a moderate control environment present.
Reference:
Berkeley. Internal Controls framework. Web 2013. <http://controller.berkeley.edu/internal-controls-framework> 9th December, 2013.
