Acc 544 Controls For Outflow Research Paper
Controls for Outflows
Biniyam Beyene, Christie Ferrell, Gabriel Mendoza and Paula Strahl
ACC/544
May 2, 2015
Professor Tracie Youngblood
Controls for Outflows Purchasing, accounts payable, cash disbursements, finance, investment, and payroll are key components to a successful and efficient business. Internal controls are needed in these outflow process to prevent fraud and theft within the business. The follow proposal will list the types of controls that are needed and reason for the controls.
Finance
One of the things that cannot be overlooked when it comes to controls is finance. Finance is the lifeblood of an organization. Without proper controls and functionality and control, a company’s finances can be out …show more content…
Verify that the goods and services purchased have been received.
Perform monthly reconciliations of operating ledgers to assure accuracy and timeliness of expenses.
Potential consequences if review and reconciliation is not performed:
Improper charges made to your department budgets
Disallowances resulting from costs charged to incorrect accounts/funds
Payments made for items or services not provided
Some of the best practices to follow is to review and update signature authorizations periodically, obtain pre-approval of consultant agreements by purchasing, verify receipt of goods and services to contract/ purchase order and invoice information, reconcile ledgers for accuracy of recorded transactions, and monitor that invoices are paid in a timely manner.
Potential consequences if accountability does not exist:
Unauthorized, unnecessary, or fraudulent payments or purchases
Unauthorized work performed by vendors
Loss of supplier discounts due to late payments
Improper charges to incorrect account/ funds
Security of assets
Once the company has received its purchased goods, a designated employee needs to secure the materials in a safe location. To account for resources, periodically a count will be done on inventory and compare the results with amounts shown on control …show more content…
These are all risks that can minimize with internal controls on outflows in the above proposal. Giving the business the opportunity to succeed in the company goals.
References:
Louwers, T. J. Ramsay, R. J., Sinason, D, Strawser, J. R. (2007) Auditing and Assurance Service, McGraw-Hill/Irwin
Demand Media. (2015). Steps for Internal Control on Purchases. Retrieved from http://smallbusiness.chron.com/steps-internal-control-purchases-69919.html
University of California. (2015). Internal Control Practices: Purchasing. Retrieved from http://blink.ucsd.edu/finance/accountability/controls/practices/purchasing.html
McCarthy, M. P. & Flynn, T. P. (2004). Risk from the CEO and board perspective: What all managers need to know about growth in a turbulent world. New York, NY: McGraw-Hill.
Raval, V. H. & Fichadia, A. (2007). Risks, controls, and security: Concepts and applications. Hoboken, NJ: John Wiley & Sons.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Managerial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley &
Biniyam Beyene, Christie Ferrell, Gabriel Mendoza and Paula Strahl
ACC/544
May 2, 2015
Professor Tracie Youngblood
Controls for Outflows Purchasing, accounts payable, cash disbursements, finance, investment, and payroll are key components to a successful and efficient business. Internal controls are needed in these outflow process to prevent fraud and theft within the business. The follow proposal will list the types of controls that are needed and reason for the controls.
Finance
One of the things that cannot be overlooked when it comes to controls is finance. Finance is the lifeblood of an organization. Without proper controls and functionality and control, a company’s finances can be out …show more content…
Verify that the goods and services purchased have been received.
Perform monthly reconciliations of operating ledgers to assure accuracy and timeliness of expenses.
Potential consequences if review and reconciliation is not performed:
Improper charges made to your department budgets
Disallowances resulting from costs charged to incorrect accounts/funds
Payments made for items or services not provided
Some of the best practices to follow is to review and update signature authorizations periodically, obtain pre-approval of consultant agreements by purchasing, verify receipt of goods and services to contract/ purchase order and invoice information, reconcile ledgers for accuracy of recorded transactions, and monitor that invoices are paid in a timely manner.
Potential consequences if accountability does not exist:
Unauthorized, unnecessary, or fraudulent payments or purchases
Unauthorized work performed by vendors
Loss of supplier discounts due to late payments
Improper charges to incorrect account/ funds
Security of assets
Once the company has received its purchased goods, a designated employee needs to secure the materials in a safe location. To account for resources, periodically a count will be done on inventory and compare the results with amounts shown on control …show more content…
These are all risks that can minimize with internal controls on outflows in the above proposal. Giving the business the opportunity to succeed in the company goals.
References:
Louwers, T. J. Ramsay, R. J., Sinason, D, Strawser, J. R. (2007) Auditing and Assurance Service, McGraw-Hill/Irwin
Demand Media. (2015). Steps for Internal Control on Purchases. Retrieved from http://smallbusiness.chron.com/steps-internal-control-purchases-69919.html
University of California. (2015). Internal Control Practices: Purchasing. Retrieved from http://blink.ucsd.edu/finance/accountability/controls/practices/purchasing.html
McCarthy, M. P. & Flynn, T. P. (2004). Risk from the CEO and board perspective: What all managers need to know about growth in a turbulent world. New York, NY: McGraw-Hill.
Raval, V. H. & Fichadia, A. (2007). Risks, controls, and security: Concepts and applications. Hoboken, NJ: John Wiley & Sons.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Managerial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley &