Sample content Internal Controls for Inflows ACC/544 Abstract Income cycles are susceptible to a number of dangers. To tackle the different dangers linked to the inflow of income appropriate cash, sales, accounts receivable, stock, and manufacturing internal controls should be there. The Securities and Exchange Commission (SEC) have shown a number of problems linked to suitable acknowledgement of income inflows(Louwers, Ramsay, & Strawser, 2007), it is therefore essential that all the inflows outlined above have efficient precautionary and detective risk management controls. Below every part of the company’s income inflow cycle and suggested controls to offset their associated risk is explained. Cash Money, of all sources in a company is frequently most significant main target of scams. Since money is so extremely liquid, it’s difficult to follow cash-based scams back to a particular person or individual. Money controls are also complicated by the truth that it&

1. ACC 544 Week 4 Internal Controls for Inflows
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Sample content
Internal Controls for Inflows
ACC/544
Abstract

2. Income cycles are susceptible to a number of dangers. To tackle the different
dangers linked to the inflow of income appropriate cash, sales, accounts
receivable, stock, and manufacturing internal controls should be there. The
Securities and Exchange Commission (SEC) have shown a number of problems
linked to suitable acknowledgement of income inflows(Louwers, Ramsay, &
Strawser, 2007), it is therefore essential that all the inflows outlined above have
efficient precautionary and detective risk management controls. Below every part of
the company’s income inflow cycle and suggested controls to offset their
associated risk is explained.
Cash
Money, of all sources in a company is frequently most significant main target of
scams. Since money is so extremely liquid, it’s difficult to follow cash-based
scams back to a particular person or individual. Money controls are also
complicated by the truth that it’s not quickly recognizable organization
property and is extremely moveable. As a result, controls over money should be
generally solid (Louwers, Ramsay, Sinason, & Strawser, 2007, p.
211).Excellent internal control starts with suitable segregation of responsibilities.
Correct segregation entails various individuals and various divisions tackle the
money payment approval have custody of blank docs (checks), discharge the
documentation for payments, and carry out the bank reconciliation (Louwers,
Ramsay, Sinason, & Strawser, 2007, p. 214). In case checks surpass a pre-
determined limit there must be multiple signatures and in events of abnormally
higher sums, the organization must consider 3 more signatures to verify approval.
It is also essential to make sure that money and unused checks are secure always
and that accessibility to those things is restricted and managed. According to the
discussion of segregation of responsibilities, when the cash accounts are
reconciled, it must be done by people not really linked to those dealings, having an
outside party analyze this account will provide a higher level of control and will offer
a much better possibility to identify mistakes. Combinations of 2 or more of these
duties in a single particular person, one office, or one computerized method may
open up the doorway for mistakes and scams (Louwers, Ramsay, Sinason, &
Strawser, 2007, p. 214).
Sales
Though money is an extremely liquid asset with the highest risk of fraud, sales do
face similar risks, however not because of liquidity or mobility. Because of the time
differences between when the sale happens and when the cash is obtained, leaves
it open to many problems. Since bills are prepared depending on sales information
when there is an incorrect sales amount or it doesn’t match, it offers proof

3. of possible sham. It is essential that all sales are correctly managed and taken into
account; there are a few fundamental controls which must be set up to make sure
safety against sham.
1) No sales order must be entered without a client order.
2) Bills must be pre-numbered and exclusive to that process.
3) Accessibility to stock and delivery must be limited to authorized individuals.
4) A daily reconciliation must take place.
5) Accountants must be advised to document sales and accounts receivable only if
all supporting records are available.
6) Client bills must be compared to bills of lading and to client orders.
7) Pending orders must be reviewed often to prevent failure to invoice.
By having a mistake control log in place, create a clear segregation of
responsibilities and having set up clear policies and procedures known by all,
bogus sales and
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