Institution
The mindset of the management is being thoughtless of the relevance of the function of the travel sellers toward the wishes of the organization. While the journey dealers are the principal area of interplay between the customers and the company, there are inadequate measures which have been put in place to make certain the experienced dealers are assigned to supply offerings to customers. The threat that the Internal Auditor wants to account for in the inside audit of Collingwood department is the loss of customers due to ineffective services provided with the aid of the tour agents. Due to their low experience, they are much less in all likelihood to furnish great offerings to customers which will have an effect on the organization's capability to keep customers.
The procedure used in operational audit
The procedure used in operational audit which resulted to the discovery of the above errors is records assessments to determine the orders placed and the actions that have been performed in relation to them. This lead to the discovery of not signing some orders, some products had not been paid for, the use of verbal request in making purchases, and missing orders. The error found is the implementation error. This is an error in which the required action is not performed after an order has been placed. The consequence of this error is that the documentation of transactions of the travel company can be false compared with the actual orders placed and the products that have been provided to customers. This error can also result into inability of the organization to determine the authenticity of the products purchased or sold in relation to its principles, policies, and code of practice. The recommended organizational chart should be composed of the following departments (Brazel, 2008). Future instances of this error will be detectable by the use of recording keeping and verification system in which orders placed are recorded, verified, and signed by the respective individuals so that any incidence of no verification, signing or authorization are examined and detected at the right time and corrected. The modified organizational structure should be as follows:
The potential weaknesses in the internal controls for the payment system
The potential weaknesses in the internal controls for the payment system at the organization is that the Managing Director provides an advise on the amount of remuneration that employees need to be allocated without the understanding the demands of the latter's tasks or signing an agreement with the employee. There is a likelihood of fraud in when the MD allocates low amounts of payments to employees while allocating higher personal benefits. The preparation of the payroll should be performed by all the employees in different positions within the company in order to address the complexity of the tasks performed by each person rather than the Payroll Clerk. The approval of the payroll package has been assigned to the Chief Accountant without the consultation of other people within the organization such as the MD and the HR Advisor. There is a high likelihood that the Clerk can collude with the Chief Accountant to recommend better payments for themselves at the expense of other employees. This is contrary to the requirement that during the formulation of a payroll system, it is required that different stakeholders within an organization need to agree on the payment structures that needs to be used depending on the financial position and profit potential of a business.
The problem of not recording some sales items by Julie
The problem of not recording some sales items by Julie can be solved by ensuring all records are compared with the corresponding receipts issued to customers before they are approved. It is also required that Julie should not be allowed to deposit all the cash or record them without cooperation with the company's Accounting Manager. The process of updating accounts receivables should not be done on an individual basis, but the accountant needs to cooperate with the Accounting Manager. The process of preparation of cash receipts journal should be performed before the payments are deposited to ensure that there is a similarity in the amounts deposited and that in the journals (Curtis & Payne, 2008). It is also recommended that the customers should be given the option of paying for services in cash after which they can be issued with receipts. This will provide additional source documents for verifying transactions and creating records of sales in the journals.
In the operational unit of the IT function
In the operational unit of the IT function, the main weakness is that the programmers perform testing of the programs in the absence of employees or operators who will be using them. The employees may not be available during testing in order to learn any technical information about the operations of the programs or how to resolve a technical issue during operation. This weakness can be resolved by ensuring employees are included in the implementation or testing stage of the program and teaching them how it works and methods of resolving the technical issues. Another weakness in the IT operational unit is that the duty of ensuring the computer operating system is maintained to the latest version has been assigned to the librarian despite the fact that this role is more technical and requires a person who has knowledge of operating systems management such as the system analyst. The recommended suggestion is to assign this role to the systems analysis so that he can use his experience and technical skills to perform maintenance of the software. He will also ensure the right software is obtained from the supplier. This will ensure the resulting operating system is effective in the performance of the functions of the organizations in accordance with its goals and objectives. The operational weakness of open security doors at the IT department implies that the computer room could be easily accessed by unauthorized persons and the hardware or software can be stolen. This can be a great loss to the company in acquisition of new hardware. The measure that can be put in place is to ensure the doors are always locked and entry into the room is subject to seeking permission from the security staff. This will ensure any person who enters the room is observed and does not cause damage to the IT systems or try to possess a component of the system. The level of fire preparedness at the IT department is also ineffective since the fire extinguishers do not have valid test tags which imply that they may not be effective in use in case of a fire outbreak. This weakness can be addressed by replacing the present fire extinguishers with those having valid test tags. This will increase confidence of usability of the extinguishers in case of fire outbreak. There is a weakness that the IT department will encounter a challenge in acquiring computer hardware since their present supplier has moved to a new state (Henderson et al., 2013). However, this challenge can be addressed by ensuring the company finds another supplier within its state of operation but ensure the supplied computers have similar characteristics as those of the previous supplier.
References
- Brazel, J. F. (2008). How do financial statement auditors and IT auditors work together?. The CPA Journal, 78(11), 38.
- Curtis, M. B., & Payne, E. A. (2008). An examination of contextual factors and individual characteristics affecting technology implementation decisions in auditing. International Journal of Accounting Information Systems, 9(2), 104-121.
- Henderson, D. L., Davis, J. M., & Lapke, M. S. (2013). The effect of internal auditors' information technology knowledge on integrated internal audits. International Business Research, 6(4), 147.
