Internal Control and Risk Evaluation Essay

In todays society, interior controls are applied to support an presidential terms managers to become more successfully to release the responsibilities by applying and understanding internal control concepts. Internal controls are most frequently saw as a lot of red tape however, internal controls have different circumstances when confirming high moral and ethical values which should be communicated in an organization. Internal controls are essenti whollyy composed of five interrelated components which are communication and reading, monitoring, control environment, risk assessment, and control activities. The four areas of concerns are accounts due, payroll, accounts payable, and livestock. The identification of risks in the system, how the risk would be merged into the flowcharts, the internal controls that must be used, and an evaluation of the internal control system, and outside controls must be used. The biggest vulnerability area is accounts due be showcase of an auditing and chronicle perspective this is where the point money is received into the organization. In the flowchart, account receivable is recognizable as the point where payments pull up stakes be posted. Account receivable has a secondary risk area in which the late charges, interest and other fees are added.The area of payroll is where the main risk concern will always be an individual superseding payroll internal controls. An additional internal control that can be applied by use of flowchart designs will be for authorized individuals having access to the authentic payroll processing function that provide access for authorizations of direct deposit/ or the printing of the payroll checks. imprimatur is the main internal control area with accounts payable. The nonexistence of authorization is the major weakness, which can be in the form of control overrides in the AIS and physical form. As associated to the flowchart, there is an important weakness that willexist in the process from t he requesting department to other areas. The most critical internal control point is the inventory because of the physical counts corresponding with the AIS records. On the flowchart, inventory is identified as the point where inventory levels are maintained and tracked because of the easy access the area poses the biggest risk. Risks in SystemThe risk with using any accounting software will always have uncertainties. Some of the risks are human error entropy input, hostage breaches, and fraud that put increase pressure on management staff in maintaining or achieving financial targets which have intensified the risk of inappropriate accounting or disappointment to disclose associated party transactions. The statement above only means that the organization needs to have security controls that forbid management from manipulating data for investor purposes. Another essential risk would be the establishment of illegal programs which delete or access files, corrupt files by the install ation of a virus, changing the programs that cause un bankable data to process. Threats and risks to databases might include unauthorized access that allows altering, deleting, corrupting, destroying, or stealing data (Beard and Wen, 2007, p. 212). To conserve the loss of important data using accompaniment files are crucial that will be overwhelming to an organization. The organizations good reputation will be at risk if essential information reporting is misused, misdirected, and could cause damage to the competiveness of the organization. Internal Risks and ControlsIn the society today many hackers is known to have both external and internal risks that can soften an organization security systems. Therefore, the collection of data is critical to establishing virtuous security controls for external and internal that ensure complete secure transactions, verification of the data is valid, and unloosen from errors. Tapping into the organizations telecommunication lines can be an act ivity that may seriously impact the data collection (Beard and Wen, 2007, p. 217). Integrating exceptional internal control methods are a requirement to address exposure to major risks in an organization electronic accounting system because the responsibility primarily on the management staff. Creating and maintaining active internal controls includes the assessment, testing, and documentationof internal controls which includes operations, access, program development, and changes. Internal Controls to Mitigate RiskEliminating risk of internal controls is by establishing some of the following Maintenance of records that detail and reflect all transactions Disposition of said transactions including the disposition of the assets Record transactions accurately to permit valid financial statements in accordance with GAAP employ timely and decisive detection of unauthorized transactions Evaluation of Internal ControlsFor Kudler Fine Foods to certify appropriate application of internal co ntrols into the organization systems, control activities must exist. The internal controls will include but are not limited to activity or functional management evaluations, transaction assessments, reconciliations, statistics processing and physical controls, and separation of duties. The evaluation of application of internal controls inside an accounting system should be ongoing and frequent. Kudler Fine Foods must make sure the organization maintain acceptable resources, make available financial, operational, and compliance with correlated information. The organization employees obligations and control responsibilities should be successfully communicated while ensuring compliance is the number one imperative factor. Kudler Fine Foods take must exist for every individual to report alleged improprieties and the employee recommendations are petitioned and acknowledged.ReferencesBeard, D. and Wen, H.J. (2007). Reducing the Threat Levels for Accounting Information Systems. Challenge s for Management, Accountants, Auditors, and Academicians. Retrieved August 12, 2009 from http//www.nysscpa.org/cpajournal/2007/507/essentials/p34.htm University of Pennsylvania, (2009). Internal Controls Self-Assessment A run away to Internal Controls. Retrieved August 13, 2009 from http//www.sru.edu/pages/1511.asp