The use of such a machine would alleviate the risk of employees altering checks for personal gain. 4. Physical controls: Protecting your assets is critical to the internal control process. It is to be noted that your current use of a safe for payroll checks is one useful implementation of this control. However, it is strongly recommended that you implement some further physical controls.
Challenges of Managing a Non-Profit Organizations There are different challenges a non-profit organization face, although I believe that those same challenges are faced on for profit organization either at the same level or very similar. Trust is an issue that both non-profit and for profit organizations will encounter at some point in their business and therefore they would need to be as transparent as possible. Transparency entitles you to provide clear statements of where your money goes, how it is utilized in your organization, and how it is making your organization accomplish their goals. It is not the only thing that is necessary to make the stakeholders, other business, employees or anyone interested in other business to trust in your organization. For a non-profit organization trust is a key element to engage volunteers, donors and other business; without trust chances are that the organization might fail to achieve their mission.
3. Goodner’s Huntington office clearly could have benefited from some simple internal control procedures. These procedures would have been able to stop, or at least make it very difficult for Woody to misappropriate the assets of the company. The most effective controls relate to the deficiencies listed above: A) Allow access to the accounting records only to the bookkeeper. Sales reps can view records but not modify them.
These companies make a point of following the law to ensure that others cannot take legal action against them. For example, a company may create more waste than necessary, but it will remove of the waste in a legal method rather than dumping it illegally. Accommodating An accommodating stance signifies that a company believes social responsibility is important -- and perhaps as important as making a profit. These companies satisfy all legal requirements and attempt to meet ethical standards. An accommodating company does not
This is an area of the financial statements where knowledge is largely confined to management, and the auditors often have little choice but to rely on full disclosure by management in order to identify related parties. This is especially the case for a close family member of those in control or having influence over the entity, whose identity can only be revealed by management. Identification of material related party transactions-Difficulties • Related party transactions may not be easy to identify from the accounting systems. Where accounting systems are not capable of separately identifying related party transactions, management need to carry out additional analysis, which if not done makes the transactions extremely difficult for auditors to find. For example sales made to a related party will not necessarily be differentiated from ‘normal’ sales in the accounting systems.
1 requires that "in all matters relating to the assignment, independence in mental attitude is to be maintained by the auditor...he must be without bias with respect to the client. "26 Because a principal purpose of auditor independence is to provide assurance to investors, the accounting profession has long required independence not only in fact but also in appearance. SAS No. 1 states, "Public confidence would be impaired by evidence that independence was actually lacking, and it might also be impaired by the existence of circumstances which reasonable people might believe likely to influence independence. "27 Accordingly, "Independent auditors should not only be independent in fact; they should avoid situations that may lead outsiders to doubt their independence.
Writing a code of conduct, supporting it at top levels and communicating it to employees is just a start. Publicly commit to being an ethical organization - Corporations that are open about their ethical standards and conduct seem to be more trustworthy than those who stay silent. Separate auditing from consulting functions - Allowing Arthur Andersen to both audit and consult with Enron created at least an appearance of a conflict of interest. Talk with employees at all levels often – Failure to communicate causes far more pain than smashing your thumb with a hammer. Build ethical conduct into corporate systems - Define your position as an ethical business.
Not only does being socially responsible give you a better public image, it also will give you better and more media coverage. The amount of positive media coverage a corporation receives is extremely important for business. Another example of Ben and Jerry being socially responsible is their corporate philanthropy. Ben & Jerry’s also donate a portion of its pre-tax profits to corporate philanthropy. Corporate philanthropy is employee-led through the Ben & Jerry's Foundation.
Summary: Ethics in Finance. Ethical values play an important role in the world of business and finance. However, it is important to note that ethical issues have constantly plagued the financial/business world. Many of these issues eventually led to cases of illegal activities, such as corporate fraud, as stated in the mini-case: Worldcom Inc. Ethics plays a significant role in the success of a financial career. The five main reasons for the use of ethics in the decision making process are- it creates a sustainable business, builds trust which brings rewards, builds leadership skills, has a higher standard than laws, and foster good reputation and conscience.
Does Corporate Governance Matter? The claimed advantages of having corporate governance in an organisation: 1) Increased transparency and accountability in executive decision making • According to some findings of empirical studies, CG can provide to benefits in provision of quality in financial reporting, a reduction in management over consumption, and improved management monitoring. 2) Improved economic performance • Some people argued that good CG contributes to improved economic performance of an organisation. By having a good corporate governance in place, there is a framework that would encourage an organisation operates more effectively and management make better decision. There is strong tendency that an independent board will provide fresh ideas, a less blinkered approach and facilitates management decision-making.