Case 3.2 Essay

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Case 3.5 List what you believe should have been the three to five key internal control objectives of Goodner’s Huntington sales office. The Goodner’s Huntington sales office should have internal control objectives: • Reliability of financial reporting. Record transactions timely and accurately. Secure physical inventory assets. It make sure that financial reports are free of material misstatements. • Effectiveness and efficiency of operations. If the employees are reliable, so they can safeguard inventory and other resources against loss. • Compliance with applicable laws and regulation. That make sure all employees comply with all applicable laws and regulations. List the key internal control weakness that were evident in the Huntington unit’s operations. • Weak control Environment: Instead of an extensive system of internal control, T.J. and Ross Goodner relied heavily on the honesty and integrity of employees they hired. The sales manager, Felix Garcia, is lack of focus on internal control, and only paid attention to sales. • Weak accounting information system Use “off-the- shelf”accounting general ledger package. Besides bookkeeper, sales manager and sales representative had unrestricted access to the accounting system. That causes large volume of sales and purchase transaction often swamped. Recording accounting document didn’t in timely basis, the sales representatives often jotted the details of a transaction on a piece of scrap paper. • Weak control activities Lack of segregation of duties. Sales representatives were given full access to accounting system, inventory and customer orders. The receptionist doubled as secretary and bookkeeper. The delivery workers worked in the inventory warehouse. Also, poor physical control for assets safeguard. Little security are used as physical protection of inventory from stolen by unauthorized

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