In your responses to your peers, critique their internal control proposals and provide constructive.

In your responses to your peers, critique their internal control proposals and provide constructive suggestions for improving them. What aspects or risks might they have overlooked? What would you suggest to make their proposals more effective and feasible?

Classmate # 1 Discussion Brandi

This week’s discussion is part of my every day life. I don’t manage 25 employees, but I do manage at least ten. I manage a small convenience store that houses a small deli business as well. We often run into issues with employee theft as we are located in a fairly poor small town. Most of our employees are living paycheck to paycheck. The internal controls that we employ are risk assessment, control environment, and strict monitoring. The size of the business here is comparable to the one listed in the discussion. I will explain what I feel is the best course of action to insure all assets are safe, minimize theft, and make sure operations run smoothly.

Our risk assessment procedure revolves around the ever changing economy. Our location has recently saw an increase in stores of the same type as our’s. Some of them offer the same products at a cheaper price due to the fact that they are part of a chain. Our customer base is also constantly changing as the majority of our older customers either pass away or move out of town. The younger customer base is more likely to complain about prices and the amount of theft observed has increased.

Controlling the environment here has proved to be a challenge in itself. Due to operating in a small town, recruiting decent employees poses quite a challenge. Evaluating potential employees is part of my job. I try to be as thorough as possible before hiring a new person. Employee theft is not an issue normally. I do count all of the money, make all of the deposits, handle payroll, and I am in charge of ordering/checking in all inventory. As part of environment control, I try to insure all employees are given adequate time off.

To me, the most effective internal control is monitoring. Monitor everything from cash, inventory, deli wastes (food thrown away in the evenings after the deli closes), customer activity, and overall appearance to the public. We have cameras everywhere and they have helped in limiting the amount of theft, both customer and employee. The one employee that was stealing was caught on video and terminated. Cash and all transactions are to be approved by the owner and any deviations from the bank statement are quickly investigated.

Overall, the above mentioned internal controls along with the ones mentioned in our text are critical in keeping any business afloat. Without strict controls and monitoring, the small convenience store I manage would have been out of business years ago, long before I came along.

Classmate # 2 Discussion Kelly

When first establishing my small business, I would initiate an attitude of importance of controls with each manager and operator hired. Starting out with these philosophies avoids the risk of personnel to form a distaste to change and not take controls seriously. Policies need to be emphasized but not so much so that it is off-putting to personnel. The right employees will respect and understand where the policies come from, so ensuring that competent employees are chosen is a requirement. In order to further structure the internal controls, I would need to assess where risk lies in my business. For instance, if there are a few accounting steps that would be easy for one person to use in order to commit fraud, I would need to break those responsibilities up among multiple employees and even keep accounting data backed up elsewhere. Two procedures I would need to keep in mind although they seem unimportant are rotating duties and requiring vacation time to be taken. These procedures ensure that multiple hands touch each step and keep personnel accountable.

Monitoring can be done at different levels and without warning to provide extra security measures. Regular auditing and surprise auditing should both be taken seriously and will keep management in touch with the business. I will also need to take part in monitoring both at the top level and throughout the business to ensure there are no oversights, either intentional or unintentional. Being a presence in the monitoring procedures will strengthen communication business-wide.

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