Date Week 5 Discussion and Participation Questions Discussion Question 1 Explain how a company’s growth may outpace current controls. Feel free to include specific examples or incorporate your own experiences where internal controls were no longer effective as the company expanded and grew…
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1). Concurrently, it is worth mentioning that there are five identified elements that are crucial in any internal control system to ensure effective and efficient implementation: control environment, risk assessment, control activities, information and communication, and monitoring (Kansas State University par. 4). Given these theoretical frameworks, organizations that experience significant changes in terms of growth through diversification, expansion (in products or markets) or acquisition need considerable and appropriate changes in internal control systems that would cater to the transformations made. For example, in a small rural bank which started with only one branch, the internal control system set in place should conform to the amount and quality of resources and corporate information that need to be safeguarded. A limited amount of “physical control measures are introduced such as locked key-card access and locks so that there is no theft of valuables. Several organizations have policies which require supervision of any person who enters a bank vault” (Bhattacharyya par. 7). ...
In this regard, the internal control system of an expanding bank should be adjusted and adapted to the needs of its expansion by addressing more clientele, more resources, and therefore, more safeguards are necessary to prevent theft, fraud, negligence, and wastage, as intended. In some examples provided by the Federal Bank of San Francisco, some components of a sound internal control framework include the following guidelines: “(1) safeguard access to physical and electronic assets and records; (2) ensure adequate segregation and rotation of duties; (3) identify, monitor and minimize conflicts of interest; (4) establish and enforce authority and risk limits; (5) maintain appropriate staffing levels and expertise; and (5) conducting ongoing monitoring” (Federal Reserve Bank of San Francisco 2-3). Large commercial banks therefore require more intricate and complicated but comprehensive internal control systems that would ensure safeguarding the resources of the banks and those of their growing number of clientele on an ongoing process. Works Cited Bhattacharyya, Madhurjya. Objectives of Internal Control. 8 July 2010. 15 December 2011 . Federal Reserve Bank of San Francisco. "Intternall Conttrols and Operational Risk Remain on Our Radar Screen." On the Radar Screen November 2004: 2-3. Kansas State University. Internal Controls. 30 June 2003. 15 December 2011 . Discussion Question 2 Describe a common fraud scheme for investments. Explain the controls that may be put in place to prevent the fraud. A common fraud scheme for investment was disclosed in the official website of the Federal Bureau of Investigation (FBI) that circulated in
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