Absence of Effective Internal Controls in a Small Business Operation (Coursework Sample)
DEMONSTRATING HOW The absence of internal controls in small business operation increases likelihood of fraud. SHOW HOW IT IMPACTS resource ALLOCATION AND USE AND HOW IT CAUSESa loop hole for asset misappropriation may HENCE likelihood of fraud.WE WERE TO TALK OF OTHER MORE EFFECTS LIKE THEFT AND POOR DCECSION MAKING .source..
How The Absence Of Effective Internal Controls In A Small Business Operation Increases The Likelihood Of Fraud.
The absence of internal controls in small business operation increases likelihood of fraud in that resource of the business may not be correctly allocated in a most efficient manner. Mistakes are likely to be made in resource allocation due to absence of internal controls and a loop hole for asset misappropriation may be created hence likelihood of fraud.
Next when internal controls are absent in small business operations, errors may not be timely collected and this may lead fraud like billing of customers twice. A likelihood of overspending, cash misappropriation and cash shortfalls that can result in such a business being declared bankrupt.
Likelihood of fraud due to absence of internal controls in small business operations may be evident in susceptibility of a business to making wrong business decision through its employees that are motivated to commit fraud against the business. This may be through unpermitted authorization of payments may be in form of petty cash .Failure to follow appropriate cash management procedures and misappropriating cash such that cash ends up being disbursed for purposes that are not business related .Appropriate receipts for tax purposes may end up not being processed and produced for the business. Ba
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