Introduction
Walmart is a popular retail store operating on several continents. Its head office is in Bentonville. The company has adopted a business model of selling a variety of consumer products at a low price to grow its market. Unlike its competitors the company does not charge suppliers any slotting fee, however, it provides incentives to store managers so that they can stock fast moving goods. The company operates supermarkets, hypermarkets, cash and carry stores, restaurants, apparel stores, digital retail, warehouse clubs, and specialty electronics. I had the opportunity to interact with my cousin who works for the company. In our conversation, I realized that the company has adopted some internal controls to help prevent errors, fraud, and theft (Walmart, 1).
Internal Controls
The retail store has established several internal controls in various departments to encourage accuracy of records and avoid cases of theft and fraud. The first and most realizable internal control is that all stock entering the company’s warehouse is recorded. Prudence in recording enables the management to have clear records of the quality, quantity, and type of stock kept. Besides, all stock leaving the warehouse is recorded. Thus, the management can accurately establish the total inventory in the warehouse at any given time. The management carries out impromptu stock taking to ensure all the stock kept in the warehouse is the recorder. This irregular stock taking not only ensures accurate stock records but also makes it difficult for the staff to take some goods for personal use and replace them later (Weygandt, Paul and Donald, 37).
The retail store has also established several internal controls in the cash section. The first internal control established is providing a receipt for all sales. These receipts make it possible to establish whether the cashier was accurate in carrying out cash transaction. Second, all sales terminals show customers cost of each item during the ringing process. This control prevents overcharging or undercharging customers. Third, the cashier requires the authorization of the section head before voiding a sale. This control ensures all item voided by the cashier are not passed to the customers. Fourth, the section head carries out surprise cash check. This surprise cash check ensures that the money in the till plus the sales made through debit and credit cards equal the amount indicated in sales register. Thus, the cashier cannot use some money during the day and refund it later before leaving the office. Fourth, no person is authorized to interfere with cash till in absence of the cashier. Thus, in the case of loss of money, the cashier cannot transfer the blame to another staff (Weygandt, Paul and Donald, 41).
The following controls have been adopted in the shopping area. First, clients are not permitted to enter the dressing room with more than two items. This control eliminates the possibility of hiding items while in the dressing room. Second, CCTV cameras are installed in the shopping mall to help monitor the flow of customers and discourage shoplifting. To further deter shoplifting, notices are kept at several points in the shopping mall indicating that all shoplifters will be prosecuted as per the law. Third, notices are kept at different points in the shops indicating that smoking is not allowed. This control helps to limit cases of fire in the store. Besides, several fire extinguishers are kept at different points in the store to minimize effects of fire outbreak.
The management has also put in place internal controls in the human resource department. The first internal control is on the hiring and firing of staff. The control requires that staff hired should meet the minimum qualification stated in the staff manual. Besides, any staff in the store is immediately dismissed if he is involved in any form of fraud or theft. The second internal control in the department is on building the capacity of staff. This control demands periodic training of staff to refresh their skills so that they can carry out their functions efficiently Weygandt, Paul and Donald, 47).
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Weaknesses in the Internal Controls and Ways of Improving the Weaknesses
There are several weaknesses in the firm’s internal controls. First, there is no limit on the amount of cash that a cashier can keep in the till. Lack of this control exposes the store to high risk of loss in case of robbery. Thus, cashiers should not be allowed to keep cash beyond a given amount in their tills. Second, the clerk recording items received in the store’s warehouse is authorized to record items issued to the shelves. This weakness makes it possible for the clerk to steal some items and omit them completely from the store’s records. Besides, oversight errors may not be identified in time. This errors and frauds can be avoided by segregating duties to ensure the receiving clerk is not the issuing clerk Weygandt, Paul and Donald, 52). Lastly, there are some blind spots in the shopping mall. These spots encourage shoplifting. The management can eliminate this weakness by ensuring adequate lighting of the store and providing adequate cameras and mirrors.
References
Walmart. "Walmart." Save Money Live Better. 2016. Web. 24 Feb. 2016.
<http://www.walmart.com/>.
Weygandt, Jerry J., Paul D. Kimmel, and Donald E. Kieso. Accounting Principles. Hoboken,
N.J: John Wiley & Sons, 2014. Print.
