Essays on The Controls in the Organization Assignment

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The paper 'The Controls in the Organization' is a great example of a management assignment. To prevent fraud from occurring, the non-profit government organization should strictly adhere to the rules and regulations of internal control. Internal control involves the adoption of procedures and methods in an organization. It is aimed to safeguard the assets of the organization, to ensure that the financial information prepared in the organization is reliable and accurate, ensure that the organization is run according to operational and financial requirements and also to assist in achieving the various objectives set by the management of the organization (Razaee, 2002). To avoid fraud n an organization like this, duties should be adequately separated.

For instance, custody of particular assets in the organization should be separated from accounting; if temporary or even permanent custody of certain assets is allowed to undertake both duties, then there are chances that the person will adjust the documents so as to avoid responsibility. For example, if a particular person in the organization serves both duties of receiving the cash and entering the customer into the books of account (IBISWorld, 2016).

Then there are chances of that person receiving the cash and keeping it for his or her use and they make adjustments on the customer’ s account to show that the payment was received and spent under the organization To avoid this, the organization should separate duties hence preventing fraud n the organization. Also, transactions’ authorization should be separated from the custody of assets related; people authorizing transactions should be prevented from controlling the property related to avoiding fraud n the organization. Again, there should be adequate separation of responsibilities; that is, operational and record-keeping duties should be separated to prevent bias in the records as the involved try to adjust the transactions to achieve balanced records (Razaee, 2002). To prevent fraud in this organization, activities, and operations should be duly authorized.

This is done to prevent chaos and to satisfy the controls in the organization. Authorization in a big organization like this can be specific or general. Under the general authorization, the policies are made for the whole organization whereas specific authorization deals with individual transactions within the organization(IBISWorld, 2016). To avoid fraud in this group, general permission should be assigned to highly skilled people who can apply skills of internal control with a lot of ease otherwise some people can be easily confused due to large volumes of transactions that they deal with hence opening the organization to fraud and corruption (Razaee, 2002). Documents and records should be adequate in this kind of organization to help trace any element of fraud.

Reports keep records for day to day transactions and to avoid fraud in this organization, the rules, and regulations for coming up with credible records should be properly followed (Deagan, 2009).

The documents should be prepared according to the international accounting standards. They should be numbered consecutively so that in case one record gets lost, it can be easily identified, they should also be prepared immediately a transaction occurs or few minutes after so that one does not forget and cause chaos in the organization as far as that particular transaction is related, they should be simple to allow non-professional users to even understand the information communicated and finally, they should allow multiple uses where possible to reduce many forms which can give the management some challenges when identifying errors or which are difficult to correct (Razaee, 2002).

References

American Institute of Certified Public Accountant (AICPA, 2005). “Management Override of internal controls”. New York: Wiley

Carl, S.W. (2010). Survey of accounting. Cengage Learning. Retrieved on April 2012

Deagan, C.M. (2009).In Financial Accounting theory. North Ryde, N.S.W: McGraw-Hill.

Razaee, Z.R. (2002). Financial statement fraud: prevention and detection. New York: Wiley

IBISWorld (2016): Origin Energy Limited - Premium Company Report Australia

30-06-2015, 25 pages. Retrieved from https://www.ibisworld.com.au/car/default.aspx? entid=35

CPA Australia Ltd (2007): Internal controls for small business. Melbourne Vic 3000 Australia

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