Research Articles Base: Internal Financial Control System

Review of the Internal Financial Control System in Garment Trading Company

Title: Review of the Internal Financial Control System in Garment Trading Company’   Background: ABC Garment Trading Limited was established in Hong Kong sine 2000, hold 30 workers in Hong Kong. They have grown to become regarded as a major manufacturer of quality apparel to the Chinese garment manufactures export to Europe. They have three main customers in Germany for classical ladies wear.   ABC Garment trading limited would like to development expend the business and maintain stable and high quality apparel products to obtain more customers and made more profitable. Other the hand they want to create a system and procedures guide to control the operation cost and review the payment term / policy with customer and supplier factory to match up the mission statement for expend the business.   Review the internal finances systems and procedures for the garment trading company an examination of the problems associated with trading with Chinese garment manufactures and the proposal of possible ways in which a very competitive environment can be made more profitable.     Research Objectives: Cash Flow – How the change the payment term / policy of customers and supplier factory to increasing the cash flow and bring down bad bat.   Financial budgeting –  How to create the financial budgeting report for control the monthly expenses and bank balance to change the present problem of bank balance instable.   Operation Cost guide – How to create the operation expenses guide to control the operation cost for real transaction.   Methodology   - Interview the sales term to review the policy for how the manage, change and adjust the policy credit limit/times and payment tram – Interview the customer and supplier factory to review the policy, credit limit and payment term.   – Interview with financial manger how to create the weekly financial budgeting report for control the monthly expenses and bank balance to change the present problem of bank balance instable. Which operating cost is abnormal how can control.   – Interview with Quality checker – how can decreasing the quality checking in China procedure times and the overseas travelling cost.   -Meeting with Bolton classmate to discuss the problem and get more detail or data for the project contents.   -continues with my literature review to obtaining for idea and sample to settle the problem on garment trading company in internal finance control system.   Project Plan - Interview the sale term, Quality checker, financial manger will be held on Nov06. -Interview some peoples work in garment trading company will be on Nov 06. – Interview customer and supplier factory Nov 06 – Review all interview information and results of the review Internal Finance Control System Dec 2006 - Keep continues with my literature review -Meeting with Bolton classmate on Dec 06 -continues with my literature review to obtaining for idea and sample to settle the problem on garment trading company in internal finance control system.   Credit:ivythesis.typepad.com

Review of the Internal Financial Control System in Garment Trading Company

Title: Review of the Internal Financial Control System in Garment Trading Company’ Background: ABC Garment Trading Limited was establis...

Impact of Internal Control Systems on an Organizational Performance

Impact of Internal Control Systems on an Organizational Performance Introduction The management in various organizations is obliged to provide necessary controls, particularly in their internal system. The implementation of such internal control and policy are applied to secure the revenues and have a proper allocation on the expenses and resources. Having the internal control in the management will sure create a great change among the structure of operation in the business. Internal Control The internal control system or ICS is supported in two basic parts which are procedures and controls. The procedures can establish the necessary performance of the organizations through the operation meanwhile; the controls are applied to ensure the conducted procedures of the business. The ICS allows the management to determine the measurement of the conditions or characteristics that can damage the entire organizations and turn into the improvements and cost-effectiveness (Brewer and List, 2004). There are changes that might drive the organization change its process, objectives, and others, for over the time. The internal control is an ongoing process and can help the entire organization to analyze its goals and objectives. Determining the risks is another scope of the control that can be describe as the detective and preventive controls (Brewer and List, 2004; Benison, 2007). Taking the idea of changes and the detective/ preventive actions, it only emphasizes that the management should place a monitoring action on the controls of the activities. Basically, monitoring helps the entire organization to ensure the effectiveness of the ICS as well as the effectiveness and efficiency of the policies, procedures and the responsibilities (Benison, 2007). Organizations should create a consistent philosophy regarding the establishment of the sound internal control system to help the organization in improving the overall business efficiency, communication and cooperation, and managing the basic policies (Nabtesco, 2006). Effectiveness of Internal Control The effectiveness should be also according with the efficiency and both are the fundamental management responsibilities. Effectiveness is judged on the basis of the results on the implementation of ICS. In an organization, the success of ICS as well as recognizing its effectiveness is based on meeting its objectives. The most effective representation of the control is done through recording. The manager has a responsibility to ensure that there is an internal control and therefore, emphasizing their function in monitoring the sales and the performance of the people. This gives rise to the relation of internal control in detecting or preventing the misstatements or errors in the records thus, allowing the controls to be consistent to avoid the discrepancies in the values (CPA, 2002). The Effect of Internal Control on Management and Performance Through testing the effectiveness of the controls and assessing the risks, the strategy in increasing sales can be achieved. By the use of appropriate procedures of inquiry, documentation, observation, and re-performance, the manager can understand how well the internal control is implemented. All the gathered information, the auditor (who is usually different from the manager) can observe if the financial statement is auditable as well as determining the risk that might involve in the system and how it can be controlled. It is true that there is a need for control system, not only for assessing the risks and creating an action or response but also for the security of the entire organization. The ICS is best applied with the guidance of the objectives which is to have a clear communication on the duties and responsibilities of the people, have a system that is appropriate on the activities, and to recognize the critical points in every activity and ensuring it. The assurance of the effectiveness of the internal control is based on the continuous monitoring whether the system in adequately designed properly, executed and effective in the certain activity. In the continuous process of internal control, the management can realize a more systematic way in handling the activities that involves the cash or budget handling. Conclusion The internal control should be performed by a person who has the knowledge in internal control operation or having the background in accountancy. All the knowledge and skills of the individual will reflect on the recording processes or financial statements of the company. The firm should be aware that the presence of errors and inconsistency in reporting can be a sign that there is a fraudulent action within the procedures. Also, the manager must maintain the communication to ensure that the process in the management is being followed. The internal controls can significantly return the core advantages in the business such as stability and improvement in the accountability.   References: Benison, M., (2007) Internal Control Guide, Office of the Comptroller, Quality Assurance Bureau [Online] Available at: http://www.mass.gov/Aosc/docs/business_functions/bf_int_cntrls/Internal_Control_Guide_Volume_I.pdf [Accessed 03 March 2011] Brewer, D., & List, W., (2004) Measuring the Effectiveness of an Internal Control System, Gamma Secure Systems Limited, Wm.List & Co. [Online] Available at: http://www.gammassl.co.uk/topics/time/time040317.pdf [Accessed 03 March 2011]. CPA, (2002) Assessing the Effectiveness of Internal Control over Financial Reporting in Accordance With Section 404 of the Sarbanes-Oxley Act of 2002, Certified Public Accountants, McGladrey & Pullen [Online] Available at: http://www.mcgladrey.com/Resource_Center/Articles/SarbanesOxleyActInternalControl.pdf [Accessed 03 March 2011] Nabtesco, (2006) CSR Activities Corporate Governance, Annual Report [Online] Available at: http://www.nabtesco.com/ir/pdf/2006_3/AR/annual_report_2006_005.pdf [Accessed 03 March 2011].   Credit:ivythesis.typepad.com

Impact of Internal Control Systems on an Organizational Performance

Impact of Internal Control Systems on an Organizational Performance Introduction The management in various organizations is obliged to p...

Impact of Internal Control Systems on an Organizational Performance

Impact of Internal Control Systems on an Organizational Performance Introduction The management in various organizations is obliged to provide necessary controls, particularly in their internal system. The implementation of such internal control and policy are applied to secure the revenues and have a proper allocation on the expenses and resources. Having the internal control in the management will sure create a great change among the structure of operation in the business. Internal Control The internal control system or ICS is supported in two basic parts which are procedures and controls. The procedures can establish the necessary performance of the organizations through the operation meanwhile; the controls are applied to ensure the conducted procedures of the business. The ICS allows the management to determine the measurement of the conditions or characteristics that can damage the entire organizations and turn into the improvements and cost-effectiveness (Brewer and List, 2004). There are changes that might drive the organization change its process, objectives, and others, for over the time. The internal control is an ongoing process and can help the entire organization to analyze its goals and objectives. Determining the risks is another scope of the control that can be describe as the detective and preventive controls (Brewer and List, 2004; Benison, 2007). Taking the idea of changes and the detective/ preventive actions, it only emphasizes that the management should place a monitoring action on the controls of the activities. Basically, monitoring helps the entire organization to ensure the effectiveness of the ICS as well as the effectiveness and efficiency of the policies, procedures and the responsibilities (Benison, 2007). Organizations should create a consistent philosophy regarding the establishment of the sound internal control system to help the organization in improving the overall business efficiency, communication and cooperation, and managing the basic policies (Nabtesco, 2006). Effectiveness of Internal Control The effectiveness should be also according with the efficiency and both are the fundamental management responsibilities. Effectiveness is judged on the basis of the results on the implementation of ICS. In an organization, the success of ICS as well as recognizing its effectiveness is based on meeting its objectives. The most effective representation of the control is done through recording. The manager has a responsibility to ensure that there is an internal control and therefore, emphasizing their function in monitoring the sales and the performance of the people. This gives rise to the relation of internal control in detecting or preventing the misstatements or errors in the records thus, allowing the controls to be consistent to avoid the discrepancies in the values (CPA, 2002). The Effect of Internal Control on Management and Performance Through testing the effectiveness of the controls and assessing the risks, the strategy in increasing sales can be achieved. By the use of appropriate procedures of inquiry, documentation, observation, and re-performance, the manager can understand how well the internal control is implemented. All the gathered information, the auditor (who is usually different from the manager) can observe if the financial statement is auditable as well as determining the risk that might involve in the system and how it can be controlled. It is true that there is a need for control system, not only for assessing the risks and creating an action or response but also for the security of the entire organization. The ICS is best applied with the guidance of the objectives which is to have a clear communication on the duties and responsibilities of the people, have a system that is appropriate on the activities, and to recognize the critical points in every activity and ensuring it. The assurance of the effectiveness of the internal control is based on the continuous monitoring whether the system in adequately designed properly, executed and effective in the certain activity. In the continuous process of internal control, the management can realize a more systematic way in handling the activities that involves the cash or budget handling. Conclusion The internal control should be performed by a person who has the knowledge in internal control operation or having the background in accountancy. All the knowledge and skills of the individual will reflect on the recording processes or financial statements of the company. The firm should be aware that the presence of errors and inconsistency in reporting can be a sign that there is a fraudulent action within the procedures. Also, the manager must maintain the communication to ensure that the process in the management is being followed. The internal controls can significantly return the core advantages in the business such as stability and improvement in the accountability. References: Benison, M., (2007) Internal Control Guide, Office of the Comptroller, Quality Assurance Bureau [Online] Available at: http://www.mass.gov/Aosc/docs/business_functions/bf_int_cntrls/Internal_Control_Guide_Volume_I.pdf [Accessed 03 March 2011] Brewer, D., & List, W., (2004) Measuring the Effectiveness of an Internal Control System, Gamma Secure Systems Limited, Wm.List & Co. [Online] Available at: http://www.gammassl.co.uk/topics/time/time040317.pdf [Accessed 03 March 2011]. CPA, (2002) Assessing the Effectiveness of Internal Control over Financial Reporting in Accordance With Section 404 of the Sarbanes-Oxley Act of 2002, Certified Public Accountants, McGladrey & Pullen [Online] Available at: http://www.mcgladrey.com/Resource_Center/Articles/SarbanesOxleyActInternalControl.pdf [Accessed 03 March 2011] Nabtesco, (2006) CSR Activities Corporate Governance, Annual Report [Online] Available at: http://www.nabtesco.com/ir/pdf/2006_3/AR/annual_report_2006_005.pdf [Accessed 03 March 2011].   Credit:ivythesis.typepad.com

Impact of Internal Control Systems on an Organizational Performance

Impact of Internal Control Systems on an Organizational Performance Introduction The management in various organizations is obliged to p...

Effectiveness of Internal Control Over Cash in Government Ministry

Effectiveness of Internal Control Over Cash in Government Ministry   A government ministry or department that has internal control of its finances including  cash will operate and render public service more effectively than one which has none.   Internal controls are measures taken to monitor  the work of staff and ensure their following of rules and regulations in the course of their work. Effective internal controls must be comprehensive and functional, with provisions on the correct performance of tasks and reporting of problems.[1]   Cash is an important asset of an organization’s financial position and its sound management helps in avoiding theft or fraud in everyday operations.[2] Internal controls in cash management can be done through personnel policies or technological processes, as in the separation of duties of staff handling accounting and disbursement.[3]   To be effective, internal control or management of cash must provide the right amount of money in the right place and time to enable the government ministry to meet its obligations in the most cost-effective manner.[4] Effective cash management is characterized by the use of a treasury single account system (TSA) that pools all revenues on a daily basis to ensure cash availability for expenditures, by a clear definition of the coverage of the system and by realistic planning and projections for the ministry’s short-term cash and for its budget.[5]   Efficient internal control over cash in government ministries offer the following benefits: [6] It increases the certainty that payments are done on time and also reduces the risks of mismanagement or fraud in operations. It reduces idle cash held by ministries and payment authorities in transit . It helps develop a short-term securities market that is efficient.   Cash management focuses on cash flows and balances, although expenditure  and revenue aggregates are expressed in accrual terms in many countries. When there is a difference between cash requirements and budget approvals, problems may arise, and the risk is that cash will be drawn by spending authorities in advance of need, that in turn will undermine central control discipline. A separate cash flow monitoring system has to mitigate such risks.[7]   Effective cash control in ministries requires efficient banking and clearing systems and capable data transfer. This has to be integrated with efficient information management systems in the ministry and the analytical capabilities of its staff.[8]   Leadership in a ministry is crucial in internal control of cash. If management shows little concern, the staff is unlikely to be diligent.[9] People will follow rules if there is adequate surveillance and punishment, but rewarding good behavior is better than punishment, because it internalizes ethical behavior and avoids the resistance that accompany punishment.[10]   The benefits stemming from reduced expected losses in an internal control must exceed Its primary cost of personnel and a control that prevents loss is better than one that detects it early.[11]   Internal control should be integrated into a ministry’s normal operating structure where a focus on controls has been instilled in everybody, because this would result in better internal control of cash with minimum incremental cost.[12]   	   		 		 		 		[1] Marquis Codjia, “The 		Relationship Between Internal Controls and Cash Management”, eHow.com, 		5 August 2010. 		<http://www.ehow.com/facts_6816356_relationship-internal-controls-cash-management.html> 		[accessed 19 April 2011] 		 		 		 		[2] ibid 		 		 		 		[3] ibid 		 		 		 		[4] Ian Lienert, “Modernizing Cash 		Management”, Technical Notes and Manuals, <http://blog-pfm.imf.org/files/fad-technical-manual-3.pdf 		> [accessed 19 April 2011] 		 		 		 		[5] ibid 		 		 		 		[6] Mike Williams, “Government Cash 		Management Good – and Bad – Practice”, September 2004, <http://www.storkeyandco.com/Library/Cash_Management/williams_technote.pdf 		> [accessed 		19 April 2011] 		 		 		 		[7] ibid 		 		 		 		[8] ibid 		 		 		 		[9]Carol F.Brown, “Internal Control 		Concepts’, 24 January 1995 <http://www.shsu.edu/~aac_cwb/control1.htm> 		[accessed 20 April 2011] 		 		 		 		[10] ibid 		 		 		 		[11] ibid 		 		 		 		[12] ibid Credit:ivythesis.typepad.com

Effectiveness of Internal Control Over Cash in Government Ministry

Effectiveness of Internal Control Over Cash in Government Ministry A government ministry or department that has internal control of ...

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