GOVERNANCE

The following are the weakness cited in the internal control of each company

 Sending a copy of purchase order to the receiving department may lead to deficiency of
the department in handling the transaction, less thorough or they will not thoroughly
check and count the materials that will be delivered if given the fact that there were no
record of the exact quantity of materials to be received
- Failure may lead to incontrollable shortage that cannot be conclusively place on
neither receiving nor storekeeping. In contrast with this, the receiving department
might report receipts that were never been received, the receiving department as well
as the storekeeping department may act in fraudulent by decreasing the number of
materials ordered without anyone knowing.

Misstatements How to improve

Deficiency increases the probability of unfaithful
inventory count subject to theft because in some
cases it could happen that the shipment may be
larger than that what is written or indicated in the
purchase order, this will result to wrong
inventory count, with the lack of records made, it
would be hard to tell who’s department is
responsible for the mater.
Mr. Clark needs to consider giving the receiving
department a copy of purchase price without
indicating the exact amount of items to be
received (using perpetual inventory) they will
check and count it properly and if anything
happens they can hold storekeepers liable since
they need to me an initial upon receiving the
goods turned over by the receiving department.

Because of this mater, the company is vulnerable

in being taken advantage of it might encourage
receiving to take goods.

Failure to isolate the responsibility of this mater

also indicates that they are less concerned and
are not held liable

 The payroll check should not be given back to the computer department supervisor and
should be given to the authorized and appropriate personnel of the HR.
- First of all, it is not in the job description of a supervisor to distribute paychecks , it is
the role of the HR, also checking the timecard every end of the week may result to
another problem in the future.

Misstatements How to improve

Filling the timecards with fictious names and HR/finance and the time keeper must work
extracting the checks made out to such names together in doing the payroll if given the
when they are returned after they have been opportunity, the payroll must be approved by
signed. the owner/ business partner/executive of the
company to ensure reliable, accurate and
It can be subjected to miscalculation or faithfulness of the payroll information.
manipulation of hours, rates and extension of
time, worst is it can also work in a non-existing The time keeper must also sign the time cards
employee on a daily basis for it to be right and accurate.

 The bank statement and cancelled checks should not be reconciled by the manager, but
should be sent by the bank directly to the home office, where the reconciliations should
be made against the manager’s report of cash disbursement
 misstatements
Since the manager decided to handle the
problem herself personally, it may be subjected
to manipulation, she may draw checks for
personal use and manipulate it by omitting it
from her list of disbursement or change the
amounts reported in the cash disbursement.
How to improve
The report of cancelled checks and bank
statements should not be reconciled by the
manager herself, bank must send it directly to
the home office and have the branch manager
direct to the home office to submit the list of
cash disbursement in her account and all
supporting documents needed.