- April 23, 2014
- Posted by: essay
- Category: Term paper writing
In order to minimize the negative impact of internal control system limitations, the organization should enhance internal control procedures (Hartman and Schafrick, 2004). Examples of internal control procedures are authorization procedure and segregation of duties. These procedures are very important but they should be implemented in the combination with other internal control procedures. The authorization procedure implies the thorough verification of supplied information, its accurate processing and analysis. The company should identify the authenticity of information and assess its accuracy to make adequate conclusions and decisions based on this information. The segregation of duties is also extremely important internal control procedures because this procedure minimizes the risk of overlapping in the performance of duties by the personnel of the company (Nitzan and Shimshon, 2009). What is meant here is the fact that often different employees, holding different positions in the organization, they perform similar or identical duties. As a result, the effectiveness of their performance decreases, while the segregation of duties helps to tackle this problem and to control overlapping functions.
Furthermore, the lack of internal control has multiple manifestations, such as irregularities, inaccuracy, poor communication and overlapping functions performed by the personnel of the company. In fact, the lack of internal control becomes obvious fast and auditing helps to reveal the lack of internal control. For instance, auditing may reveal numerous errors or irregularities in reporting of the organization. Therefore, the organization suffers from the lack of internal control. The absence of accurate reporting is another manifestation of the lack of internal control. The organization should enhance immediately the internal control system because the lack of internal control has a destructive impact on the organizational performance and development in a long-run perspective.
In this regard, the journal entry is very important for the internal control system. The missing journal entry provokes inaccuracy in accounting and errors that may be revealed in the course of in-depth auditing. Therefore, the journal entry is essential for the accurate accounting and stable performance of the organization. In case of the missing journal entry, the organization may fail to notice serious problems in time that may undermine the position of the organization in the market (Hazen, 2003). Consequently, the organization should pay a lot of attention to its journal entry to enhance its internal control system.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the organization should pay a particular attention to the internal control system because the internal control system is crucial for the successful marketing and financial performance of the organization. Failures of the internal control system can be easily identified in the course of auditing and they should be eliminated as soon as possible to prevent negative impacts of the poor internal control system.