FNSACC516 Implement And Maintain Internal Control Procedures - Assessment 3

Task 9 Internal control weaknesses and improvements

Snap It Pty Ltd is a company that produces specialist stationary and business cards. The company has recently computerised its accounting transactions. There has being some difficulties with the system operations and a computer expert has visited the company to report on the problems and any inadequacies. The following points are in the report he sent to the management of Snap It Pty Ltd Ltd:

• All computer personnel (except keyboard operators) were trained in system design, operation and programming when conversion from the manual to the electronic system took place.
• Each time the computer program is run it is assigned to a specific employee who is responsible for running the program and making any changes and answering all questions.
  No records of computer operations are kept because each employee is responsible for their own computer run.
• All staff in the organisation have access to the computer room during office hours.
• The accounting records are kept with the backup files in an unlocked cupboard in the computer room.
• There are no computer checks built into the program as the organisation has decided to retain the manual controls from the previous system.

Describe the weaknesses in the internal control system as advised to management and recommend improvements in these controls and processing procedures. You may want to consider at least five of the following:

• Segregation (or separation) of duties
• Control over programs
• Stand by arrangements
• Input controls
• Output controls
• Processing controls
• Master file controls