Internal Controls in Business Operations

This assignment delves into the critical role of internal controls within a business framework. It examines various objectives of internal control systems, such as ensuring completeness, validity, and accuracy of operational processes. The focus then shifts to specific applications of internal controls in the finance cycle and sales system. Examples illustrate how organizations develop, review, and implement timetables and procedures to facilitate compliance with internal control standards.

Answer to Assessment 1:
Q1. Definition of “Corporate Governance”
Corporate Governance indicates the manner anorganization is administered. Again, it is the
mechanism by which corporations are directed as well ashandled. Essentially, it
indicatesundertaking the business according to the desires of stakeholders’. Fundamentally, it
is necessarilyundertaken by the board and the concerned committee for the corporation’s
stakeholder.
Q2. Internal Control
Internal control is a procedure for assuring attainment of acorporation’sintents in
functional efficiency, dependable financial reporting, and conformity with regulations,
regulations as well asstrategies. An intensive concept, internal control engages everything
that manages risks to acorporation.
Identification and explanation of the key principles of internal control and auditing
The Main Principles of internal control include:
- Establishment of Responsibilities
- Maintenance of records
- Insurance of Assets by maintaining important employees
- Segregation of different duties
- Mandatory employee rotation
- Split Associated Party Accountability
- Using Technological Controls
- Performance of regular independent reviews

Q3. Roles of an internal auditor
The roles of internal auditor include:
-Verification the existences of diverse assets and recommendation of proper safeguards for
protection
-Evaluation of adequacy of the system of internal controls
-Recommendation of improvements in controls
-Assessment of compliance with policies and procedures and sound business practices
-Assessment of compliance with state and federal regulations and contractual obligations
-Review of operations to determine whether outcomes are consistent with the established
objectives and whether the functions are undertaken as per plan
-Investigation of reported incidences of scam, embezzlement, stealing
Persons responsible for an entity for an entity’s reviewed and development of internal control
system are internal as well as external auditor.
Q4. Accountability
Accountability refers to the liability of either a specific individual or else a department to
undertake a particular task in accounting. For example, in essence, an assessor re-evaluates a
corporation’s financial assertion is in charge and legally liable for any kind of misstatements
or elseoccurrences of fraud.

Q5. Role of Auditing and Assurance Standards Board
The Auditing and Assurance Standards Board can be considered as an independent,
constitutional agency in chargeofdesigning diverse standards as well asguidance
for assessorsand providing other assurance services.
Q6. Australian Auditing Standards
Australian Auditing Standards institutesnecessities and deliver application as well as other
requisite instructive material particularly on:
 accountabilities of an assessor when involved to carry out an assessment of a financial
assertion, or else comprehensive set of financial declarations, else wise other
historical pecuniary information; and
 entire form along with content of assessor’s report
Name and definition of three Australian Auditing Standards
ASA 102- This Australian Auditing Standard presents the directives as well as regulations as
regards compliance with different ethical necessities at the time of performance of audit,
analysis as well as other assurance engagements.
ASA 200- This Australian Auditing Standard presents the overall purposes of the
Independent Auditor along with the performance of an audit consistent with the Australian
Auditing Standards.
ASA 220-This Australian Auditing Standard presents the directives for maintenance of
quality and mechanisms of quality control for audit of a financial assertion as well as other
historical financial information.

Q7. Roles of ASX
ASX operates as an operator of market, clearing house as well as facilitator of payments
system. Essentially, it also supervises conformation todifferent operating regulations,
endorses corporate governance standards among listed corporations ofAustralia and assists to
edify different retail investors.
Explanation of “The Corporate Governance Principles and Recommendations”
The expression “corporate governance” illustrates the structure of regulations, associations,
systems as well asprocedures within entities and by means of which authority is particularly
exercised and guarded within companies. Fundamentally, good corporate governance
encourages investor confidence that is critical to the capability of business concerns listed on
the ASX to try to acquire capital. However, these principles as well as recommendations
presentsuggested corporate governance exercises for different entities that are listed on the
(Australian Stock Exchange) ASX. As suchfrom the point of view of the Council, these
suggested corporate governance practices are likely to attain good governance results and
meet the sensible expectations of majority offinanciers in most circumstances. The structure
of specific principles as well as recommendations intends to promote essential principles that
include the following:
Q8. Role of ASIC
The role of ASIC involves the following:
- Maintain, assist and enhance the performance of financial system and businesses
- Promote both confident as well as informed participation by financiers and users in
the financial system
- Administers the law effectually and with minimal procedural necessities

- Enforce and provide effect to the regulation
- Receive, procedures and store, effectively and swiftly important information
- Make vital information as regards corporations along with other bodies easily
available to users
Q9. Listing the 10 core principles for the effective corporate governance
Core principles of effective governance include the following:
- Laying foundation for management and supervision
- Frame the entire board to enhance value
- Act both ethically as well as sensibly
- Shielding integrity in the process of corporate reporting
- Carrying out timely and at the same time balanced disclosure
- Respecting the authority of diverse security holders
- Identifying and managing risk
- Remunerating fairly and accountably
- Helping business entities adopt diverse governance exercises founded on a wide range
of factors
- Help companies to attain good governance results and meet the logical expectations of
most financiers in various circumstances.
Q10. Development and implementation of a sound system of internal control is the most cost-
effective method of combating fraud”
Yes, development and implementation of a sound system of internal control can be
considered as the most cost-effective method of combating fraud. This is so because, internal

control effected by board of directors of a company, management as well as other key
personnel help in providing reasonable assurance as regards the attainment of effectiveness
operations, maintenance of dependability of financial reporting and conformation to pertinent
directives and regulations.
Q11. Describe the key requirements of organisational policy and procedures relating to:
(a) Corporate Governance
The key requirements that are in line with the corporate governance includes the constitution
of the organization, procedures and controls of the firm, policies as well as with the external
laws and regulations that can be applicable. It is done with the help of effective explanation
of the policies and the processes so that the corporate governance mechanism can be easily
conveyed within the firm.
(b) Financial delegations and accountabilities
The key requirements that are in line with the organizational procedures and policies of the
firm include:
 Say who will be accountable for financial management
 Explanation of how financial systems will be established and managed
 Define how delegations of authority for financial decisions will be reported
 Explainhow the firm will be protected from fraud and financial mismanagement
 Maintain clear procedures and actions
 Specify the timing of any actions
 Explain when it was approved
 Highlight when it was last reviewed.

Q12. RG 64 Failure to lodge documents
This section initially explains what the organization will do if they fail to lodge the
documents. In this aspect the law imposes on the company secretaries specific
accountabilities for the lodgement of the annual returns, any announcement of
transformations to the officeholders and the registered office of the organization.
In this aspect the summary of the proceedings along with deregistration, reinstatement are
even explained. In this aspect the six monthly returns from the external administrators, the
foreign company accounts and the additional actions are stated down.
The underlying principles with respect to RG 64.10 are explained where the explanations,
deregistration are stated forward.
The next step of the failure to lodge the documents explains the time of the withdrawal of the
proceedings against a company secretary and in this aspect the policies in relation to the
annual returns are explained in line with the sections of RG 64. The process to apply for the
withdrawal proceedings are even put forward so that the organizations can have a clear idea
about the process that would be effective for the failure for lodging of the document. The
associated information with respect to this topic is even put forward so that effective idea can
be attained.
Assessment 2
This section of the paper discusses about the principles that have been learnt during
the course and it is seen that corporate governance has been found to be one of the significant
issues that are in consideration by most of the organizations that have been functioning all
over the globe. It is seen that Qantas is one of the renowned airline companies that have been
operating in Australia and various other countries. Corporate governance involves balancing

the interests of the stakeholders with respect to the objectives of the firm and it is seen that
Qantas frames their operating strategies by keeping in mind the interests of the stakeholders
and the primary objectives of the organization. It is seen that the main objectives of the firm
has been to maintain their competitive edge in the market with the help of extensive services
and increasing their revenue in the economy. It is seen that Qantas even has the objective of
expanding their business all over the globe. The company undertakes such actions by looking
into the interests of the stakeholders as well and thereby plans actions like providing
extensive offers and luxurious flight experience at reasonable rates so that the consumers can
feel a sense of satisfaction and would be motivates to undertake travelling in their flights
frequently. It is even seen that various innovative facilities are given to their customers and
the suppliers are provided with on time payments and cordial relationships so that they
remain loyal to the organization as well. The development of an effective corporate
governance mechanism can be undertaken with the help of frequent surveillance of the
market and the economy in order to gain knowledge about the requirement of the
organization so that they can undertake changes in their corporate governance policies as
well. It is seen that effective monitoring would lead to elimination of any faults and in this
manner would lead to the development of the corporate governance leading to rise in the
competitive edge and satisfaction among the stakeholders. The development of cordial
relationship among the organization and the stakeholders leads to effective corporate
governance and in that manner rise in profit and development of the firm.

Assessment 3
Q1. What are reasons for unethical behaviour? Discuss ethical considerations
andconfidentiality for management and handling of files and records.
The main reasons behind the development of unethical behaviour involve:
 Individual factors
 Issue-specific factors
 Environmental factors
Ethical considerations andconfidentiality for management and handling of files and records
Written records have a solidness and reproducibility that is unique from spoken data; there
are hence extra concerns about the assurance and treatment of paper documents or the
computerised records. These challenges and concerns have turned out to be more
unpredictable and exceptional because of the digitizing of data. Confidentiality breaches can
happen because of the way records are established, transmitted and stored.
Conventionally, experts ought not construct, store records and update on their own electronic
gadgets (e.g., PCs and flash drives) or individual online accounts. In the event that a work
environment knows about and permits such off-site treatment of records, privacy safeguards,
for example, password protection and anonym zed customer identification proof, ought to be
observed meticulously.
All specialists who rehearse independently and all businesses ought to have clear composed
strategies concerning customer records. The work environment policies concerning records
administration ought to normally address.
 Record accuracy and content;
 Record storage, both electronic and paper;

 Ownership of records;
 Record access—both with respect to personnel who may read and manipulate the
record and with respect to rights of access by clients;
 Record review and retention and related statutes of limitation;
 Transfer of information, including transfer by electronic means;
 Procedures for handling requests for information by someone other than the client
or the client's representative;
 Use of client records for research;
 Destruction of material removed from records.
Q2. Describe the basic elements that include corporate governance?
The key elements of corporate governance include:
 Direction
 Oversight
 Corporate Citizenship
 Stakeholder Relations
Q3. Explain the role of the government in maintaining good corporate governance. Explain
three financial legislations.
The role of the government in maintaining effective level of corporate governance includes:.
 Self regulation
 Enforcement
 Rules versus the principles comparison and explanation
The three financial legislations include:

 Public Finance Management Act
 Financial Transaction Reports Act 1988
 Financial Framework Legislation Amendment Act (No 3) 2012
Q4. What do you understand by the word “Shareholder”? Explain
(a) Role & Right of shareholders
(b) Consultation with shareholders
(c) Equitable treatment of shareholders
Disclosure and transparency
(d) Develop timetables for implementation:
The shareholders refer to the individuals who are the holders of the share of an organization.
This makes them a part of the organization as they become the owner of the firm and has the
right to vote and claim dividends out of the profit of the firm.
(a) The rights and the roles of the shareholders include:
 Voting on key issues (for example, election and dismissal of directors) and attendance
at shareholder meetings;
 Right to transfer ownership (often in restricted circumstances);
 Receive company reports and announcements;
 Entitlement to dividends and other distributions;
 Entitlement to a final distribution on winding up;
 Participation in corporate actions such as further issues of shares, share buybacks,
mergers and de-mergers; and
 Rights to sue to make the company act lawfully.
(b) Consultation with the shareholders

The shareholders are consulted during the annual general meeting and they are invited in the
meeting in order to discuss about the various aspects that are under consideration. They are
even consulted about any issues and are asked about suggestions and recommendations and
are even provided with the financial statements and the auditor’s report so that they can have
a clear idea about the operations of the firm and can implement their suggestions as well.
(c) Equitable treatment of shareholders
There are two kinds of shareholder namely the equity shareholder and preference
shareholders. It is seen that there are various rights and responsibilities of the equity and the
preference shareholders. Therefore, equitable treatment to these shareholders are not possible
however, there shareholders within the same class are treated equitably by every organization
with respect to the disclosure of the financial statement and transparency.
(d) Develop timetables for implementation
A timeframe of a year should be given to the organizations in order to construct a plan so
that they provide effective services to their shareholders. It is seen that the policies and then
plans that should be incorporated should be evaluated from time to time in order to find any
issues that are associated with it and rectify them.
Q5. Internal controls are a process designed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
(a) Effectiveness and efficiency of operations
The proper construction of the internal controls improves the efficiency and effectiveness of
the operations as effective internal control manages and supervises the operations and hence
in case of any problems identifies and issues and rectifies it making the operations flawless.

(b) Reliability of financial reporting.
The internal control system looks into every aspect of the organization and hence looks in to
the operational function of the firm thereby establishing effective mechanisms that would
provide precise results with respect to the operations. The effective level of operations would
give out the authentic level of sale of the products and in a way the actual profit attained by
the firm and thereby establishing a reliable financial reporting. The control system even
assesses the financial statements so that authentic answers can be attained by the shareholders
and the management.
(c) Compliance with the regulations and laws
The internal control system always prepares policies and manages the control system by
taking help of the regulations and laws so that effective controlling system can be attained so
that the operations of the firm are in compliance with the laws and regulations thereby giving
out effective and reliable set of actions.
Q1. Internal control objectives (a) Completeness (b) Validity and (c) Accuracy
There are various internal objectives that are seen within an organization and it is seen that
three out of the same has to be discussed.
Completeness
Internal control aids in the maintaining completeness of the organization as it is seen that
effective management and supervision of the operational function of a firm helps in
understanding the flaws that are seen within the operational actions and therefore measures
and steps are undertaken with the help of which effective measures are taken in order to
rectify the cases and in that manner aid in expanding the business and aids in the

development of the business. In this manner the completeness of the operational function of
the firm is maintained.
Validity
The other objective of the internal control has been to maintain validity within the working
environment of the firm and even within the operational function of the organization. it is
seen that the process of internal control has the role of maintaining validity within the
organization by assessing and evaluating each and every aspect of the operational function of
the firm in such a manner that all the work process and the performance of the organization
are processed in an effective manner. In such a way, the validity of the performance is
maintained and in that matter aids in the development of the organization.
Accuracy
The objective of accuracy refers to the process with the help of which the operational
function of the firm remains accurate and it aids in the development of the internal and
external performance of the organization. It is seen that the main motive of the firm has been
to maintain accuracy within their functions and therefore the internal control has the role of
assessing the operations on a frequent basis in order to manage the operational functions and
rectify any mistakes and discrepancies that are available within the functional level. In this
manner, it is seen that evaluation and reviewing in the operational function of the firm aids in
maintaining accuracy.
Q2. “Internal controls desirable for finance cycle”. What is finance cycle and how internal
controls implement and modify according to compliance of organization.
Finance cycle refers to the counterpart of the business cycle and the investment cycle.
It covers the time from raising the resources related to finance to the repayment. This cycle is

inclusive of the increase in capital with the help of cash, dividend payment and buy back of
shares. It even includes the net debt that results from repayment of the borrowings
transformations in the marketable securities, new borrowings and transformations in cash and
cash equivalents.
It is seen that internal control has the duty of determining and managing the various
aspects of the organization and it is seen that the internal control analyses the various
financial cycles and according to the objectives of the firm. After evaluating the numerous
cycles, the most suitable one is chosen and is incorporated within the organization. It is seen
that the internal control assesses the market along in order to evaluate the change in market so
that modifications in the finance cycle can be undertaken with the help of which the
organization can stay updated with the market and maintain competitive edge in the market.
It is seen that all the changes and the implementations in the financial cycle are done in
compliance with the objective of the firm so that their objectives can be accomplished.
Q3. “Internal control desirable in sales system”.
Explain with example how to Produce, review and distribute, develop timetables, Identify
and evaluate to facilitate compliance with internal control procedures.
The internal control system is desirable in the process of sales system. It can be
viewed with the help of an example which shows that internal control assesses the operational
activities of the firm and undertakes assessment in order to discover the most convenient
process to manufacture the products that are desired at an economical cost. It is seen that this
process aids the internal control department to review the process that have been used for the
manufacturing of the product so that overview and the distribution of the product can be
undertaken in an effective manner. It is seen that distribution and review of the
manufacturing process is undertaken in order to rectify any mistakes and faults that are

available within the operational model. It is seen that this process helps in the development of
a timetable which consists of the timeframe which would be required for the development of
the product and the distribution of the product in the market. This timeframe is essential so
that the entire process can be completed within a definite timeframe thereby reducing the
level of gap within the manufacturing and the distribution of the product.