Altaya, Alyssa Paula C.

ACCE 311 (2992)

Operations Audit

Final Requirement

AVM 515

(Convenience Store)

INTERNAL CONTROLS PURPOSE

Inventory controls are set up to stop shrinkage

Inventory and cash control
(theft). While it is not profitable for each aisle to be
patrolled by a security guard, cameras throughout
the store linked to a central location allow security
staff to observe customers. More controls are
placed on cash registers to prevent employees from
stealing cash. Cameras at each register, cash counts
at each shift change, and/or a supervisor who
observes cashiers are some potential internal
control methods.
 This allows each person to provide a double-check
on the other’s work. For example, cash exchanges
hand frequently throughout the day in the check-
out line, and you can assign a separate employee to
Separation of duties (assigning
count the money in the cashier's register at the end
specific tasks within a process to
of the shift to ensure it adds up. In the area of the
different people)
store where employees receive food shipments
from suppliers, one employee can receive the
shipment and another employee can verify the
inventory while stocking the items on the shelf.

Cash registers create receipt tapes of the

transactions that occurred during each shift.
Warehouses maintain copies of receiving
documents and transfers to store shelves.
Proper delegation and
Employees use punch cards or electronic logs to
documentation
record the hours they work. This documentation
verifies that inventory transactions occurred, that
employees worked the hours reported, and that the
sales information is accurate.

Seasoned employees know the store, the clients,

and their job expectations well. Retaining such
employees diminishes the amount of time and
resources a retail store spends on recruiting, hiring,
and training new staff. Employee retention also
Employee Retention
plays a critical role in inventory control and
customer service. New employees, for example, are
more likely than seasoned employees to make
inventory control or customer service mistakes that
result in loss.

The accounts payable department is responsible to

Proper authorization, review and match the supplier invoices to the supporting
reconciliation document and verify the mathematical accuracy of
supplier invoices.
 It is advisable for a future reference reason to keep
the record sent by the A/C payable department to
maintain a strategic distance from the duplication of
Records of vouchers receipt should
payment against a similar provider's receipt, and
be kept accordingly especially the
the store manager validation or cross-check is
specifications of order
required if any deficiency is seen charge (debit) note
can be tended to and appropriately payment
voucher can be corrected.

It is prudent to save the organization's impediment

for payment for level up to Assistant Accountant for
Design that is efficient and the level above wherein the detailing (reporting) or
organized workflow of transactions immediate administrator will endorse the payment
and have a proper authorization. against the requested payment voucher. Likewise,
require the receiving clerk to sign the receiving
report to show an acceptance of accountability.

STRENGTHS

There is an amount or quality is being advised in which the possibility of loss or risk
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is lower as every amount is verified at this point.

Design that is efficient, organized workflow of transactions, and have a proper

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authorization.

Have the best employee retention since the management implements effective
strategies like attractive compensation packages, training and mentorship programs,
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onboarding and orientation, annual performance review, and recognition and
rewards system.

There is a proper authorization, review and reconciliation that will prevent the
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likelihood of inaccuracies of the total amount due or paying for goods not received.
 WEAKNESSES

The return of checked division expands the opportunity of duplication payment of

1 vouchers against the single receipt, as reports are not kept in record with a/cs office
according to the process followed in the organization.

No proper delegation and documentation made that will result to a huge chance of
2 receiving goods different from the amount ordered, receiving damaged goods and
goods with inferior quality, and theft of inventory will occur.

The financial accountant who authorizes payment to the suppliers is the same
person who received the monthly bank statement and prepares a bank
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reconciliation and investigates any reconciling items. More likely, there will be an
increased risk of fraud.

SMART RECOMMENDATIONS TO IMPROVE THEIR WEAK INTERNAL CONTROLS:

1. It is advisable for a future reference reason to keep the record sent by the A/C payable
department to maintain a strategic distance from the duplication of payment against a
similar provider's receipt, and the store manager validation or cross-check is required if any
deficiency is seen charge (debit) note can be tended to and appropriately payment voucher
can be corrected.

2. There must be a separate receiving report to be filled out by the receiving clerk to record
the details about each delivery and it is advisable that the quantity-ordered field in the
receiving department's copy of the purchase order is blacked out to encourage the receiving
clerk to physically check the quality and accurately count the received goods then compare
it to what is indicated in the packing slip.

3. The person who authorizes payment, record payments in the books, and reconcile and
investigates bank statements must be different person. It is advisable that no financial
transaction is handled by the same person to prevent fraud.