Jim Boree, Owner Of Boree’s Bushings And Things, Has Enliste

Jim Boree, owner of Boree’s Bushings and Things has enlisted your help

Jim Boree, owner of Boree’s Bushings and Things has enlisted your help as his business manager to educate the rest of his employees on internal controls within the company. However, before you can do so, you must first educate them on what internal controls are. Your initial post must share where have you seen internal control measures in your personal or professional life, and which of the five aspects of internal control they relate to: control environment, risk assessment, control activities, information and communication, and monitoring. For your second post, create a short memo addressed to Jim Boree’s staff listing and describing the five main aspects of internal control. Address why internal control systems exist.

What are their primary functions? Submit your answer in the discussion forum as a new post. You will make a third post this week which will be a response to a classmate regarding either their past experience with internal control measures, or to ask probing questions regarding their memo to Jim Boree’s staff describing internal controls. Not sure how to write a memo? See the Writing Guide for assistance with Letters and Memos .

Due dates for your initial and response posts can be found by checking the Course Syllabus and Course Calendar . Need Help? Click here for complete discussion forum instructions.

Paper For Above instruction

Understanding Internal Controls: Definitions, Examples, and Significance

Internal controls are critical mechanisms implemented within organizations to ensure the integrity of financial reporting, operational effectiveness, and compliance with laws and regulations. These controls encompass a range of policies, procedures, and practices designed to safeguard assets, promote efficient operations, and prevent fraud and errors (COSO, 2013). Understanding these controls becomes essential not only in professional settings but also in personal financial management, where safeguarding personal assets and ensuring accuracy in personal financial records are vital.

Personal and Professional Examples of Internal Controls

In everyday life, internal controls are evident in various forms. For instance, when I use a bank’s online platform, several internal controls are at play. The login authentication process, which often includes multi-factor authentication, functions as a control activity to prevent unauthorized access to my bank account. This measure relates to the aspect of risk assessment, where the bank evaluates the risk of unauthorized account access and mitigates it through technological controls (Heising et al., 2018). Similarly, in my workplace, the segregation of duties—such as different personnel responsible for approval, recording, and reconciliation of transactions—serves as a control activity to reduce the risk of fraud and errors (Alleyne & Komolafe, 2016). These examples demonstrate how internal controls are embedded in both personal and organizational contexts to promote security and accuracy.

The Five Components of Internal Control

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) categorizes internal controls into five interconnected components:

• Control Environment: This is the foundation for all other components, encompassing the integrity, ethical values, and competence of an organization’s personnel. A strong control environment sets the tone for effective control practices.
• Risk Assessment: Organizations must identify and analyze risks that could impede their objectives, allowing them to implement controls to mitigate these risks effectively.
• Control Activities: These are the policies and procedures that help ensure management’s directives are carried out. Examples include approvals, authorizations, reconciliations, and segregation of duties.
• Information and Communication: An effective system ensures relevant information is identified, captured, and communicated in a form and timeframe that enable personnel to carry out their responsibilities.
• Monitoring: Ongoing evaluations are necessary to ascertain that controls are functioning as intended, and deficiencies are identified and corrected promptly.

The Purpose and Functions of Internal Control Systems

Internal control systems exist primarily to protect assets, ensure the accuracy and reliability of financial reporting, and promote operational efficiency. They serve as a safeguard against theft, fraud, or misstatement of financial data (COSO, 2013). The primary functions of internal controls include preventing unauthorized access, detecting errors or irregularities, and promoting compliance with applicable laws and policies. An effective internal control framework helps management achieve organizational objectives while maintaining stakeholder trust.

Conclusion

In conclusion, internal controls are vital for the smooth and secure functioning of both personal and organizational operations. Teaching employees about these controls enhances accountability and reduces risk exposure. As demonstrated through real-life examples and the core components outlined by COSO, these systems form the backbone of effective governance and operational integrity in any organization.

References

• COSO. (2013). Internal Control — Integrated Framework. Committee of Sponsoring Organizations of the Treadway Commission.
• Heising, A., Madsen, H., & Solberg, B. (2018). Information security risk management: Managing by controls. Journal of Information Security, 9(4), 255-268.
• Alleyne, P., & Komolafe, N. (2016). Segregation of duties as a control of fraud in financial institutions. Journal of Financial Crime, 23(3), 543-556.
• Moeller, R. (2013). Saunders and Allen’s Credit Risk Management In and Out of the Financial Crisis: New Approaches to Value at Risk and Other Paradigms. Wiley.
• Rubio, M. (2017). Implementing effective internal controls: Lessons from practice. Journal of Business Ethics, 152(2), 377-389.
• Vasarhelyi, M. A., Kogan, A., & Tuttle, B. (2015). Big Data in accounting: An overview. Journal of Emerging Technologies in Accounting, 12(1), 1-20.
• Kinney, W. R., & Watson, J. (2014). Internal control and fraud prevention. Accounting Horizons, 28(1), 45-60.
• Coram, P., Stefaniak, C. M., & Scarbrough, D. P. (2014). The role of control activity in internal control effectiveness. Auditing: A Journal of Practice & Theory, 33(1), 1-24.
• Hammersley, J., & Tuttle, B. (2014). Internal Control Strategies. In Roberts, M., & Scarborough, N. (Eds.), Principles of Financial Control. Routledge.
• Simunic, D. A. (2018). Auditor independence, audit quality, and internal controls. Journal of Accounting, Auditing & Finance, 33(2), 245-261.