Report on Loose Control of a Family (Lab Report Sample)
The paper was to report on the findings of the company that was under the management of White and Smith. It was to show the mistakes that the management made in their different appointments within the company. It also aimed at highlighting the corruption that was taking place in the company. The paper was to recommend the best solutions that would save the image of the business and put it in the correct direction of success.source..
REPORT ON LOOSE CONTROL OF A FAMILY OF NOT-FOR-PROFITS
View of the Events That Occurred
Control over the company assets had been left under Barbie White and Butch Smith, who are in a relationship. The use of the asset had minimal supervision even from Louise. This makes fraud inevitable due to lack of sufficient checks (Gelinas, U. J. 2010, 89). Previous year audit papers attest to this too.
Barbie White proves inefficient since client assistance work assigned to her has not been attended for a fortnight. She closes the book of accounts in one company without completion and starts working for another company. This leads to delays in drawing up company accounts (ISACA, 2010, 87).
She also lacks knowledge of the school and RHI, which contains a huge percentage of company transactions and hence, poses a high risk. Cash and miscellaneous income increase due to her ignorance of company operations. This puts the company financial health at risk (Romney, M. B. 2009, 44). She quits later for lack of proper skills.
Hiring Charles Brown as an investment in the company accounts was appropriate. This prompted Louise to direct Barbie to address George’s questions and concerns. It is from Barbie’s documentation of financial records that George realizes a risk of fraud and abuse within the company.
Lack of integrity and cooperation among the staff led to misuse of company assets (Gertz, M. 2002, 65). Buck Short had another business being run with the company staff and equipment (Hall, J. A. 2011, 54). Various fictitious payments were submitted to the bank for payment. A record for the generator that was bought was never made. This is attributed to poor coordination. Punishing fraudulent staffs and rewarding active workers was appropriate since it helped to salvage the company from heavy losses (Chorafas, D.N. 2001, 23).
Weaknesses in the Accounting System
Poor Cooperation among Workers
Barbie feels angry when asked to provide documentation of the company accounts to George. She also fails to address any question from him. Moreover, Barbie submits trial balance even without communicating to him. This delays record keeping.
Barbie is just two years from college. She is ignorant of company operations. Furthermore, she makes incorrect audit entries leading to dropping of tuition fees drastically. After realizing she must work under a mentor, she quits.
Lack of Integrity
Butch Smith, in collaboration with Louise Robbins and Barbie White, issued an unqualified opinion. This regarded to the income earned from JTL as a customer, that
was material to Kettle Company (Gertz, M. 2002, 65).
In addition to lack of internal control and poor record keeping, Barbie and Butch controlled company assets with minimal scrutiny; this created room for collusion. Cash and miscellaneous income increased drastically and fictitious payments are made owing to lack of proper records. This complicated the establishment of the extent of fraud.
Recruitment and retaining of qualified workers
Personnel should be retrained with some working under mentorship where need be. Competent workers like Louise should be retained at all cost. They help in boosting the company’s performance.
Establish a sound internal control system
In case of poor internal control, a disclaimer opinion should be issued on the audit (Chorafas, D.N. 2001). A meeting of the auditors committee and the Board of Governors should be convened to establish the true and fair value of the company (Gertz, M....
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