- In your opinion, are internal controls an effective way to protect organizations of internal and external fraud? Why?
In my opinion Internal Controls should be established and should be an integral part of any organization’s financial and business policies and procedures. Why, you might ask are internal controls an important business practice?
Internal controls rely on the principle of checks and balances in the workplace. Internal controls purpose; protection of all its assets, and resources from waste, fraud, and inefficiency and to ensure accurate, reliable accounting, IT information and data as well as, they security that all policies and procedures have been carried out properly. Finally Internal Controls determine that performance levels in all the departments of the organization. (KU, 2003)
Internal control activity depends on the personnel, trustworthiness, job description clearly defined and the management oversight documented in policies and procedures handbooks for each employee. Organizational charts are a good idea for visual presentation that define the lines of authority and the expectation of each participants duties within the organization.
Internal controls are a necessary part of business management that is vital to it’s success. Without these policies and procedures the business would be influenced by whom ever was on duty at that time, and the likeliness of errors and omissions would be great. Further if Internal controls were not present Personal information would be at risk due to the improper gathering, documentation, retention and disposition of the data. (KU, 2003)
- Do you think that it is a wise investment to contract services that provide security against fraud or should it be an in-house department that provides fraud security services? Why?
Yes, I believe it is a wise investment to outsource the security and loss prevention department in any business, because it is a separate company that is not affiliated with the business. (T. Faircloth, 2012) They are contracted for the sole purpose of preventing theft internally and externally. In contrast, The company should have a security department of their own to watch the outsourced company as well, because they are not immune to theft either. It is not unheard of that the security company hires people that steal Further, the business should be on high alert and look for inconsistencies within the security company as well, It could not hurt.
Kansas State University, (2003), Internal Audit Office, Retrieved October 8, 2012 http://www.k-state.edu/internalaudit/intcontr.htm
Terry Faircloth, (2012) Shoplifting prevention and apprehension Retrieved October, 8, 2012 http://www.ussecurityassociates.com/services/lossprevention