It is well-known that the internal control environment includes various policies and skills that have to be undertaken by different departments in order to make sure that the recorded financial transactions are all correct. Also, it is necessary to monitor that those kinds of transactions are recorded unmistakably and that the rules are strictly adhered to. Internal control is a process that is carried out in order to anticipate and hence prevent improper charges. The business under consideration is a small business and its billing system. This paper will examine the successful approach towards charges and their monitoring within the internal control environment.
As such, it is necessary to present the objectives set that a company owner pays special attention to. First of all, it is the manner of working with concerned, then, of course, it is verification of the effectiveness of controls. Needless to say, a business owner gets an explicit understanding of the laws applicable, Income Tax, VAT, Labor Law. Among the objective setting is the theoretical aspect of studying Accounting.
The small business discussed has a high rate of risk management. First of all, this is defined by the security system obtained, which in this case is the owner himself. He has the password on his computer and the lock on the door, which from the business security perspective is far from being enough in order to prevent news leaks, for example. Namely, it is a risk to have data gathered on a computer without duplicating the info elsewhere, under the password too, of course. The main threat here is operational, for instance, the loss of access to important assets due to disruption of supplies. Moreover, the vulnerability of the structure of the security system is the single lock on the office; this will not protect information or supplies from being stolen. A good alarm security system is needed, though this will, of course, entails extra costs. However, as per the commitment of fraud – t is lower than in any other business that has employees, because even the most honest person is likely to commit fraud because there is temptation. Neither the business is weak to collusion for the absence of employees.
So, the following piece of advice should be taken into consideration as per this small business. The foremost step for securing oneself from technical problems and hence loss of information is signing the checks (the payroll checks, too) by the owner. This will make the owner watch the expenditures closely. One of the best solutions in terms of user-friendly software search, is choosing some program like Factum Invoicing/. It is remarkable for the multiple functions it offers. First of all, it is important for an owner who is a current employee to create reports with charts easily, have automatic backups, and what is essential to create own style of invoice layout, which in its turn helps a customer understand he/she is dealing with a loyal and professional service. This program is a user friendly for a person who runs the business by himself because all the functions are lined up and make it clear to understand how to use them. Besides, it gives a wonderful opportunity to input all customer’s personal details in a cohesive manner, and make all payments correct ultimately after the calculations in the VAT tax reports.