Internal Control Procedures And Risk Factors

Risk Factor

Internal Control Procedure

Non-Collectability of Debts

Mallacoota Marina Limited should review the aged accounts receivable and the invoices on a regular basis. It is also important to review the contract terms with the parties before starting the repair operation. The business needs to ensure that the debtors “signed approval of the credit department on all sales orders over a certain dollar amount” (Harwood 2018).

Potential Understatement of Revenue

Relevant entries of the invoices should be duly checked and ensured that appropriate items are included for the final revenue assessment. It is also essential to compare and confirm “subsequent cash receipts to verify collectability of the receivables”. In addition to this, the marina and slipway needs to adopt fair value measurement and revenue recognition to offset any potential understatement of revenue (Osc.state.ny.us 2018).

Overpayment of Overtime to Employees

Mallacoota Marina Limited needs to employ appropriate federal schemes to ensure that there is no ghost employee who is responsible for claiming overtime hours for the work which has been not performed. Installation of biometric device will ensure automated working hours and making the appropriate adjustment for the overtime assessment. In addition to this, maintaining a time sheet will ensure approval of overtime payment needs to be placed for audit assessment on a monthly basis (Accaglobal 2018).

Inventory Being Stolen

The internal control structure for the inventory needs to safeguard with a view to protect its valuable inventory items such as paint, along with some expensive electronic boating equipment. It needs to ensure that their actions against any theft will be dealt with compliance and company policies as per federal law. In addition to this, if the company segregates the duties of employees there will be less probability of employee stealing assets and cover up the theft. For instance, employee will not be able to steal from the inventory and go undetected unless there is any change in the inventory records cover for the shortage amount. Additionally, “the employee stealing the inventory must also maintain the inventory records or be in collusion with the employee who maintains the inventory records” (Wcacredit.org 2018).

Payments Being Made Twice to The Same Supplier

In case of any duplicate payments made to the vendors the internal control procedure needs to be maintained with regularly reviewing the vendor master files to remove any discrepancy. This can be prevented by accommodating only one vendor master file record for each supplier in the ERP system/accounts payable system. Therefore, any instance of duplicate entry in the vendor master file the payable system will automatically detect the duplicate vendor code associated to the same vendor thereby providing the bank details. Any instance which can prompt the vendor master file from an external activity, that accounts payable system will be conducive in the de-activating the old vendors were no longer in preference. Therefore, the duplicate vendors will be duly removed with this system (Zeepedia.com 2018).

Risk Factor

Internal Control Procedure

Job roles and responsibilities not clearly defined

The company should take the basic initiative of assigning the job roles and responsibilities in a clear written format. This will be able to specify supervision of certain operations of the company only by the assigned/authorised personnel. This will be conducive in using the overall process and separating the duties. Moreover, in case anyone employee joins they can always refer to the responsibilities and understand their roles in a better way (Heise, Strecker and Frank 2014).

Lack of coherent decision making

The decision-making within the teams should be supported with logical arguments and should not be relied on hasty decisions which will be detrimental in future the company. The decision-making process needs to be enhanced with promoting positive work environment that will enhance the cooperative behaviour in the inter-department staffs (Aziz, Said and Alam 2015).

Lack of physical & logical security  

There have been two instances where the security of IT department has been compromised. In order to ensure that such risks do not come up in future the company needs to improve its firewall and protect its devices with improved software is which will prevent any instance of security breaches. The company should particularly pay attention to any breach of personal information/identity by maintaining a close surveillance with advanced security cameras (Ge et al. 2017).

Inadequate documentation / record

The various instructions and work in progress should be duly fetched seamlessly into the “Management information system of the company”. This can be done with the use of cloud computing services which will ensure that not only any new instructions are seamlessly stored in the Internet but can be accessed by any authorised personnel at a given time. In addition to this, any document related to the procedures need to be maintained with appropriate numbering hyperlinked headings for future reference (Mahadeen et al. 2016).

No oversight and review  

This problem needs to be resolute at by reviewing of operational procedure on a yearly basis. This will ensure that the financial data are held for assessment on a constant basis to ensure that even in case of any loss of data the company will have an adequate disaster recovery system to maintain continuity in the business (Aramide and Bashir 2015).