Internal Controls - Essay Example

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According to Gilbert, Martin 2004, pp.306, internal control is a process for assuring achievement of an organizations objectives, operational efficiency and effectiveness, dependable financial reporting, and compliance with regulations, laws and policies. In the case of SONY,…
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Internal Controls
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SONY: Internal Control According to Gilbert, Martin 2004, pp.306, internal control is a process for assuring achievement of anorganizations objectives, operational efficiency and effectiveness, dependable financial reporting, and compliance with regulations, laws and policies. In the case of SONY, some of the aforementioned roles of internal controls have not been achieved as a result of various internal control weaknesses and deficiencies. In the recent story carried by the New York Times, the corporation is at a very high risk of incurring huge losses if measures are not taken to protect the gains that the company has made.
Significantly, the company has been marred will intolerable control environment. The management has failed to enhance effective communication leading to the adverse change in attitude among employees. In addition, the company has failed to identify inadequacies that pose a significant risk of loss and inaccuracies in the financial management department.
According to the audit conducted in the year 2013 (Farewell, Byron 117), SONY Company has not been conducting regular assessment of its internal control system and hence the management may fail to detect a fault in good time. Furthermore, failure to conduct a regular assessment will make some of the control system obsolete leading to huge losses.
Best Practice
An effective control system should focus on diligence and effective communication that is geared toward changing employee’s attitude towards the control system. (Susan 543) declares that the control system should be regularly examined and updated to reduce the risks emanating from obsolete technology. In this case, the control system should be several strands ahead of the technology used by fraudsters and dishonest employees. Risk reviewing and monitoring should be highly regarded. In this case, the management should constantly monitor the internal control system in order to identify areas that require advancement. This reduces the chances of incurring a material risk that would cause financial loss if it takes place.
In conclusion, the best practice in internal control system involves incorporating of all stake holders through communication and engagement in all levels of management.
Works cited
Susan R.. What is internal control? definition and meaning, P 41-160, 2013. Print.
Farewell, Byron. Internal control audit for SONY, 2013. Print.
Gilbert, Martin. Analysis and detection of errors in internal control system, Florida: Owl Books, p. 306, 2004. Read More
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