Audit (group assignment)

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Essential Internal Control Activities

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The internal control practices act as crucial of the strategic control systems are interdependent forms of activities set on an organization's standard working programs like Pluto Co. The methods are designed to protect the assets, lower the rate of errors appearance and ensure that the plans of the firm that is Pluto Co are running according to the required level of standards. While the strategic control systems set the standards and ways for measuring the operation, determine if the initial process corresponds to the expected standards of operation.

Further, the control systems enhance performance effectiveness; control practices often lower the expected business performance hence declining the systems' efficiency. However, the control systems' design needs management to equalize risk mitigation with performance efficiency (Njiru & Bunyasi, 2016). Moreover, a reduction in the control practices results in losses of the business organization. Additionally, all the business approaches subject to the effected optimization always possess two outcomes that are cost and benefits. The general view of all business organizations is not prone to misappropriation of resources, embezzlement of funds. Many business firms do have asses to misappropriation or corruption till their due occurrence. Moreover, through the internal control practices, propose mechanisms, rules and even ways implemented to enhance financial and accounting accountability.

A stakeholder is an individual having a lively interest in the success of business activity. While formulating the business organization's business structures and programs, the firm’s stakeholders and their interests are highly considered. In our scenario, we have two companies: Pluto Furniture Co and Zodiac & Co and a stakeholder Mr. Thomas.

In most companies, most stakeholders are often interested in the firm's output. For Pluto, Furnitures Co would have applied the procedures below to select the stakeholders according to their respective interests to the business. Three steps of identifying a stakeholder are: establishing the mission and vision of the firm; afterwards, identify the person to be consulted. Identify the key decision-makers, taking into consideration the impact of decisions on the stakeholders. Additionally, identify individual stakeholders’ power and influence on decision-making situations.

Moreover, these two categories of stakeholders should be considered during identification: we have a primary stakeholder and a secondary stakeholder. A primary stakeholder is a person who has a direct interest in the business (Bentley-Goode, Newton & Thompson, 2017). They are the direct beneficiaries of the company, that is, employees, among others. Secondary stakeholders are parties of a group of people that do not necessarily benefit from the business directly (Kivilä, Martinsuo & Vuorinen, 2017). A key stakeholder; is the party that influences the performance of the company. The most typical stakeholders are customers, employees, investors, suppliers and vendors, communities, government and competitors.

Internal control practices these are the policies and steps required by the business units to meet the expected objectives below: safeguarding the business assets-properly designed to protect assets from fraud or loss, enhance the reliability and integrity of financial information-internal control practices provides timely, accurate and full information, enhance compliance-ensure that the business or the company comply fully to the local laws and regulations affecting the performance of the business, promote efficient and effective operations-provision of

Essential Internal Control Activities

environment for effective operations and the final accomplishment of goals and objectives-the internal control practices establishes a mechanism for checking the achievements of operational goals

Finally, internal control activities are the policies and ways and daily activities occurring within an internal control system. The two general activities are:

Preventive actions are documentation and authority practices. Preventive control activities usually hinder undesirable activities from taking place. Detective control activities aim at identifying the unwanted occurrences, that is, reconciliation.

References

Njiru, D. K., & Bunyasi, G. (2016). Effect of Internal Controls on Financial Performance of Water Companies in Kenya (A Case of Water Companies in Tana Water Services Board). American Journal of Finance, 1(1), 11-28.

Bentley-Goode, K. A., Newton, N. J., & Thompson, A. M. (2017). Business strategy, internal control over financial reporting, and audit reporting quality. Auditing: A Journal of Practice & Theory, 36(4), 49-69.

Kivilä, J., Martinsuo, M., & Vuorinen, L. (2017). Sustainable project management through project control in infrastructure projects. International Journal of Project Management, 35(6), 1167-1183.