Internal Control

Discuss the strength or weakness in internal control that is suggested by each of the following situations:

• The organization’s executives delegate all internal control procedures to the accounting department.

In my opinion this would serve as a major weakness for an organization. The purpose of internal control procedures is to implement a system or process designed to assist in the accomplishment of goal or objectives that have been set. Typically I like to think of internal controls as a comparison of the checks and balances used by our government. From a organizational standpoint I feel like no one department in a company is more important than another so by delegating all internal control to the accounting department would possibly hinder the organizations chances of meeting our exceeding their goals. For example, a decision concerning poor quality raw materials and whether or not the company should switch to a new supplier is something that is out of the realm of the accounting department. A decision such as this should more than likely be handled by individuals directly involved in this area of the organization possibly with some constructive feedback from the accounting department to determine if the decision to change suppliers would be cost effective.

• The accounting department orders merchandise and approves invoices for payment.

Weakness. I would consider this as a weakness primarily because I believe it to be a conflict of interest. In the example I listed above concerning poor quality raw materials is one of the possible outcomes that could take place if the accounting department has been given the ability to order merchandise and approve invoices for payment. It in fact may lead to a situation in which ability for the company to produce its typical high quality products has been put at jeopardy for sake of someone in the accounting department deciding, without consulting with other departments, that it is not time to cut costs...