Having Correction Control reduces the risk of having wrong information that has found its way to the next step. It will decrease the loss thus helping increase the profit by changing the wrong information found in the Order Checking, Order Detail Checking, and Canceled Order Checking Control. In case a wrong document is found, the system will be able to send the corrective document to both the manager and group leader in each step. Consequently, they will have to stop their work until a correct document sent to the machine controlling system (Kremer et al 256).
On the other hand, compensatory Scheme reduces the risks of losing customers and wrong products as well, especially when our shoes do not match the requirement of customers. For example, if wrong color and type are produced, a compensatory scheme will be sent through email to the customer. The TF Company will apologize for their errors and provide two options to complete the order. Firstly, the customers could accept the order in a 50 percent off the price. Secondly, the TF Company will provide a lower price in exchange to give more time to complete the order.
Control Zone:
Our TF company controls include entity-level IT controls, application controls, and IT general controls.
Entity controls include suggestion program and Correction Control used in the company. The suggestion program is an entity-level control that makes suggestions for the entire company improvement. On the other hand, the Correction Control is an entity-level control that focuses on correcting the information on all order management process. Furthermore, Compensatory Scheme is an entity-level control that focuses on the entire order information. IT general controls include Employee Log-in ID and Password Change in our company. Our Employee Log-in ID and Password Change is an IT general control because it is a general IT policy in our company. This IT policy sets the format of employee login ID and dictates the strength of our employee’s password.
Besides, the application controls include Order Checking Control, Order Details Checking Control, Canceled order Checking Control, Product Checking Control and Compensatory Scheme used in the company. Order checking Control is an application control because it is a checking process used to check whether the order recording is correct or wrong. On the other hand, the order detail checking control is an application control that TF Company uses to check each customer orders placed to avoid any mistakes of a wrong document delivered. Moreover, Canceled checking control is an application that is directly associated with the checking process. In other words, it prevents the cancelation of wrong orders made by employees. Finally, Product checking control is an application control used in checking process to prevent products that do not match customers’ requirements for shipment.
Control Type
TF Company uses various control systems that include preventive, detective, and corrective control. Control is classified as preventive if it prevents errors, omissions, or malicious acts and physical access to systems or resources. Employee login ID and password change control are examples of a preventive control because they have the requirement that employees need to change their password so that it would prevent unauthorized users from accessing the systems.
On the other hand, Order checking control is a preventive control because it can check the orders information recorded on the database, before the process of producing. This system then prevents the wrong order information processing to the manufacturing line so that it would prevent a great loss. Besides, Order checking control is a preventive control because it would check the orders details to prevent the wrong products from being produced.
Canceled order checking control is another preventive control that can check the canceled orders information carefully. The system also prevents incorrect cancelation made by employees by mistake. Nonetheless, Product checking control is also a preventive control that can prevent the TF Company from manufacturing products that have the wrong information with wrong colors, quantities, and types delivering to customers.
Controls are classified as a detective if they detect or report errors, omissions, or malicious acts. Order checking control is a detective control because employees use this system to detect order recording in the database. Furthermore, Order detail checking is a detective control because employees can use this system to detect the orders' details delivered in the production line before TF Company manufacture the shoes.
Moreover, Suggestion program system is a detective control because it detects ineffective or nonexistence controls in the process. Also, Product checking control is a detective control because employees can use this system to detect the products whether they match the order details before they proceed to ship.
Still, controls are classified as corrective if they remedy problems correct errors or minimize negative impact. Correction Control is a corrective control because it fixes errors by providing the company with a corrective document important for the order management.
Additionally, Compensatory Scheme is compensating control because it is used to compensate customers. It is because they provide compensating measure when we use another control measure to find out the real existing problem. For example, if the product color we record in the database does not meet the color requirement in the order document, we can compensate by Applying for more time in preparing the products and offering a discount only to our customer.
Control Implementation
The success of TF Company’s control relies on employees as the managers are responsible for the production. Manual controls require people to initiate control activities. All the TF Company’s manual controls are designed with possible problems within the process. Firstly, Order Checking Control is a manual control because the order clerk must check the order intermediately after the order is placed and recorded. Secondly, Order Details Control is also a manual control because the group leader uses it to check the details by themselves (Kremer etal 124).
Thirdly, the Product Control is manual control because the action of checking product information for inspectors is manual. Fourthly, Suggestion program control is a manual because employees such as the order clerk and workers must fill out a form and write suggestions and experience that are passed to the employees in charge of the management or checking process who must reanalyze the process to verify if addition controls are needed.
Finally, automated controls are built into the system which is the enforcer of the control and people just have to comply. A Correction Control is automated because the system enforces the control. The system sends the right information to each wrong process. This is an automated process because employees do not need to send the right document.
Work Cited
Kremer, Rachel L., Del Rush, and Jerry Spratt. Internal Controls: Preventative, Detective and Corrective. Eau Claire, WI: National Business Institute, 2006. Print.
