A Memo for Internal Control Policies in Business
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Wilmont Electronics' profit has been less than expected for the past several quarters. After an internal audit, it was determined that inventory losses have been rising over the past year, which has accounted for the majority of the profit loss.
The audit uncovered the following problems:
- inaccuracy in reporting receipted materials
- production reporting problems
- errors in physical inventory counts
- shipping errors
- lack of security in the storage of materials
- high turnover of personnel
Write a memo to the general manager describing what preventive, detective, and corrective management controls (procedures and policies) should be addressed and possibly changed to correct the issues found in the audit. Write a paragraph addressing the major areas each procedure or policy should emphasize and identify each as preventive, detective, or corrective.
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Solution Summary
This solution provides a memo for internal control practices in 639 words.
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Re: Internal Audit Results
Dear General Manager,
The purpose of this memo is to address the issues that we have discovered during our internal audit in response to the decrease in profit that Wilmont Electronics has been facing over the past several quarters, leading to major profit loss for your company. During our audit, we have uncovered that inventory loss has been rising over the past year, and this has accounted for the majority of the profit loss. Therefore, we have identified the following problems that need to be addressed in order to correct this issue:
Inaccuracy in reporting receipted materials
Production reporting problems
Errors in physical inventory counts
Shipping errors
Lack of security in the storage of materials
High turnover of personnel
As a result of these findings, we are proposing the following preventive, detective, and corrective management controls (procedures and policies) that should be addressed and possibly changed in order to correct the issues found in the ...
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- BA, Brooklyn College
- MBA/HCM, Phoenix University
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