15 Aug Companies lose millions of dollars each year through employe

Companies lose millions of dollars each year through employee theft and fraud. To prevent this, internal controls are implemented. We will examine the types of controls companies use, and discuss what happens when these controls are missing.Consider this scenario: You own a small business with 25 employees. In your initial post, explain which internal controls you would use to protect your assets and ensure that your financial statements are accurate.In your responses to your peers, critique their internal control proposals and provide constructive suggestions for improving them. What aspects or risks might they have overlooked? What would you suggest to make their proposals more effective and feasible?To complete this assignment, review the Discussion Rubric document.I need 2 responses done on classmates1st response on classmate4-1Justin Gray posted May 27, 2020 9:34 PMThe first control I would want to have in place is to have an honest and ethical management team and solid personnel policies. With those controls in place I would hope that would result in the hiring and retaining of good employees. To prevent mistakes in areas such as inventory and payment for that inventory I would separate those two duties between two employees. Monitoring any changes in behavior of my employees could give me an idea that something has changed within their life that could cause theft or deception in the workplace.Having a bank account to deposit money in would provide a control because it decreases the amount of cash that I would need to have on hand and it also provides an independent record of deposits and withdraws on the account. I would maintain a separation of operations and accounting to assure that there are two different positions recording and verifying transactions and those amounts.ReferencesWarren, C.S., Reeve, J. M., & Duchac, J. (2017). Corporate financial accounting (14th ed.). Boston, MA: Cengage Learning.2nd response neededInternal Control Over AssetsDurango Pasch posted May 26, 2020 6:54 PMOne of the first aspects of internal control that I would implement is to establish a culture of honesty and accountability and this could be reinforced with an employee recognition program that is rewarded based on competence and merit. Employees would receive clear job descriptions and the training they need to excel at their position. When employees are hired, they would be informed that they are required to take a mandatory vacation at least once each year. This way, someone else would be filling in to perform their duties which would dissuade dishonesty, especially in the accounting department, because the person who covers their responsibilities would notice irregularities in the documentation.Every person in a department would be cross trained in at least two different responsibilities and would rotate those duties to have more than one person responsible for each aspect of the business. For instance, in the inventory department I would have the duties split up between ordering inventory, receiving inventory, and maintaining the inventory on hand in the warehouse so that no one person was ever performing more than one of those functions as a security measure to prevent employee fraud due to falsified shipping and receiving documents. This would also extend to keeping the major parts of the business such as operations/sales, custody of assets, and accounting. This way no one person is solely responsible for any business transaction from start to finish which is an internal control measure meant to promote accurate accounting information in line with government regulations. Another measure of internal control that could be used is pre-numbered documents that need to be approved by managers when an employee wants to use company funds for reasons such as travel expenses to keep a record for the accounting department.Management would be trained to be aware of possible warning signs of internal control issues such as an employee refusing to take a vacation, close relationships with suppliers, missing documents, or a backlog in recording transactions. Managers also need to be aware of changes in trends, what the competition is doing, and changes due to regulatory and economic factors so that they can take appropriate actions to minimize risks to the company.Warren, C.S., Reeve, J. M., & Duchac, J. (2017). Corporate financial accounting (14th ed.). Boston, MA: Cengage Learning.