Accounting- Internal control
monthly reconciliation of Bank account and accounts receivable and a monthly reconciliation of budgeted revenue and actual revenue are performed. Separate journals and subsidiary ledgers have been set up. By reconciling the accounts to one another, they are proving the equality of subsidiary ledgers to the controlling accounts. This process will help identify any errors.
Since FGI is a service business not a merchandising business they do not really have an inventory. However, management ensures that other assets such as office supplies are protected from waste and fraud by having an employee you distributes supplies and has a logging book where employees receiving the supplies have to sign off. This practice helps them monitor the use of the office supplies. To ensure that fixed assets are safe every fixed asset purchase is labeled or given a serial number. An inventory count is also done on a regular basis (twice a year).
Management ensures that all financial information is reliable by dividing duties. Each transaction is handled by several employees to ensure that data is accurate. An external auditor also conducts an audit every year.
A measure that could be taken to enhance the effectiveness of internal control in this company would be to introduce internal auditing. By having internal auditors who monitor the accounting controls, the efficiency and reliability of accounting information can improve. Another step they could take is to prepare a financial forecast. That is to organize a plan of operation to set goals for each division of the business. At the end of each month when actual results are compared with forecast amounts management can inspect changes from their intended results.