ACC539: Analysis of Internal Control Weaknesses at Laurel Pty Ltd

This report examines the internal control weaknesses within Laurel Pty Ltd, a company manufacturing car parts, focusing on issues such as insufficient documentation, lack of transaction authorization, and poor reconciliation processes. The report details the negative impacts of these weaknesses, including opportunities for fraud and misuse of funds. It proposes practical solutions like improved documentation, transaction authorization, and delegation of duties. Furthermore, the report analyzes the potential benefits of implementing Business Intelligence (BI) and digital dashboards, emphasizing their role in enhancing decision-making, improving manufacturing efficiency, and providing real-time data analysis to mitigate the identified weaknesses. The report concludes that adopting these strategies will help Laurel Pty Ltd streamline its processes, reduce costs, and support its growth objectives.

Running head: Report 1
Report
Student’s Affiliation
Student’s Name

Report 2
TABLE OF CONTENT
Content Page Numbers
Executive summary ………………………………………………….………….3
Internal control weakness……………………………………………….…...4
Insufficient documentation…………………………………….………………..4
Absence of transaction authorization......................................................…...4
Lack of delegation of duties ……………………………….………………….4
Reconciliation …………………………………………………………4
Impacts………………………………………………………………..5
Specific internal control suitable for Pty Ltd.’s……………………….6
Analysis of BI and Digital dashboard ………………………………..6
Effect of Digital dashboards and BI in decision-making process…………….7
Effect of Digital dashboards and BI for efficiency of manufacturing process………7&8

Report 3
Executive Summary
Developing companies are occasionally challenged and pinned down by the internal control
weakness not forgetting Pty Laurel Company which manufactures car parts. Since the company
is developing it may be faced with enormous challenges which when not effectively structured
the company might end up with deficits. Therefore, this report will highlight and illustrate the
internal weakness which Pty Ltd.'s is facing, the impacts, and practical solutions and how the
introduction of digital dashboards and Business intelligence will impact the manufacturing and
decision-making processes of the Pty Ltd.'s company. Some of the internal weaknesses
discussed are insufficient documentation, absence of transaction authorization and reconciliation.

Report 4
The Internal Control Weakness
The Laurel pty Ltd.'s company account administration and spending process possess diverse
weakness which must be addressed for it to work effectively they include;
Internal control weaknesses Impact of weaknesses Control to mitigate the issues
Poor reconciliation Laurel should know that
when their reconciliation
system is poor and the
employees are the ones to
compile the vital variables in
business from several
sources. For instance, they
can take a physical inventory
of products physically but as
well as calculate inventory
from the received and sold
products. When reconciliation
is absent it is vivid that a
company does not account for
differences and the internal
financial control system will
be weaker. Therefore pity
should improve on the
reconciliation as this will
Adequate documentation of
records.
Maintain supervision by
implementing the BI and
Digital dashboards.
Enact reconciliation.

Report 5
identify the differences amid
the two sources and get
explanations which lead to
improvements.
Insufficient documentation The laurel Pty ltd should
restructure its documentation
process since it is the input to
instituting proper financial
records and the documents
also provide evidence for
transactions made. They have
to pre-number the financial
documents so that all
transactions are accounted
for. Most importantly,
Donelson et al, posits that
proper numbering and tracing
of documents will provide
satisfactory answers to most
of the finance-related
inquiries (Donelson, Ege, &
McInnis, J, 2016). Likewise,
Proper pre- numbering and
documentation of records will
solve this weakness.
Moreover the introduction of
BI will help solve the
weakness.

Report 6
it will ease the process of
amassing financial records as
well as completing tax
returns.
Absence of control with
transaction authorization The laurel Pty ltd company
must ensure that authorization
of purchase is done prior
during resource commitment
which depends on the
business size and authority
level must be introduced to
reduce the inappropriate
spending risks. For instance,
orders above certain dollar
value like $1000, more than a
single quotation is required
which will obviously
decrease the overall
expenditure of the company
(Donelson, Ego, & McInnis,
J, 2016). Transaction
Enacting proper control
measures by taking charge of
transaction authorization
which will reduce
overspending which weakens
the company. Authorization
of transactions will help the
managers to appraise
different purchase options so
that the sales and purchases
corresponds to the company’s
objectives. This will reduce
misuse of company capital.

Report 7
authorization before an order
is placed. Allow managers to
appraise diverse purchasing
options and ensure services or
items acquires support the
objective of the business.
This helped the company a lot
in making a lot of sales on
time
Lack of delegation of duties Most of the developing
companies like Pty which is
aiming at mitigating itself in
the future are always faced
with this weakness. This is
because the workforce is
limited making the multiple
tasks on several duties. This
can cause fraudulent cases
since a single person may be
in charge of cheques issuing,
signing, and verification.
Such, mistakes make a
company incur losses through
The company should ratify
duty delegation amongst its
members to reduce cases of
overworking certain
employees and also reduce
fraudulent activities within
the company.

Report 8
fraud.
1. b. Impacts
As an accountant am confident that weak internal controls pose several impacts to accompany;
Fraudulent deeds
Pty Ltd.'s company official must beef up internal control since it creates opportunities for
fraudulent acts. For instance inappropriate keeping of records of logbooks for company vehicles.
This inadequate management of such transactions will create an opportunity for the car users to
exploit the business's automobiles like those of personal use (Donelson, Ege, & McInnis, J,
2016).). The individual responsive of monitoring the usage of vehicles has failed to take control
of this department may be due to lack of cooperation from drivers which the company should
now take charge and rectify it before it weakens the company further.
It leads to reluctance and misuse of funds and the company's properties
Lack of supervision and documentation on overtime work is a major problem in
developing companies because of the reluctance of the manager. The report realized that the
timesheets which are verified by the senior administrative executives are not questioned by
superiors like senior manager during payment approvals. This happens because managers feel
that they trust their subordinates to always validate the timing sheets thus manager always place
signatures on the invoices without counter checking. Likewise, overtime work is always not
recorded in the right manner. As a result, the company ends up possessing documents which are
not properly verified and recorded. This then causes wastage of resource and payment to undone
work.

Report 9
It will lead to manipulation whereby unutilized procurement orders weren’t conveyed to
the unit of procurement for closure. As a result, the employee might use them to get funds from
the company and the company might run at loss.
1c.The most specific and practical internal weakness which laurel Pty can implement so that
they mitigate the weakness include;
Adequate documentation and record-keeping
Enhance reconciliation
Maintain constant supervision for every department.
Enact delegation of duties to reduce fraudulent activities and
Adequately control the authorization of transactions
If Pty Ltd.’s can enact and implement the above listed practical internal control strategies they
will be able to get rid of internal weaknesses which are dragging this company behind. The
practical internal control strategies are very essential to any developing company that wishes to
mitigate itself. As expounded in part one if the weaknesses are not resolved, the company is
bound to incur losses. The listed internal controls will redirect and restructure the company
steering it toward a positive and profitable direction absolutely.
2
Analysis on the Implementation of Digital dashboards and Business intelligence
Business intelligence involves the integration and delivery of appropriate and valuable
information in a business. The BI is recommended for company use because it detects important
events as well as monitoring organizational trends so that they adapt faster to the changing
scenarios and environment (Park, Y., El Sawy, O. A., & Fiss, P, 2017). Therefore, if Pty can use

Report 10
business intelligence training effectively in the company so as to boost their decision-making
system at all management levels and also improve their tactical strategic management process.
BI has got several benefits such as improving a company's visibility, efficiency, gaining sales
and marketing intelligence and gaining competitive intelligence (Park, Y., El Sawy, O. A., &
Fiss, P, 2017). Moreover, the digital dashboards which are analytical tools used for visualizing
big data across all companies. It helps accompany to be informed, it is also essential for IP
decision making like annual and quarterly reporting.
Importance of BI and Digital Dashboards on Management decision making to Pty LTD’S
COMPANY
The BI and Digital dashboards will be very helpful to the Pty Company in terms of
decision making. This is because the Digital dashboards are best in efficiency, usability and
decision-making process (Fradi et al, 2017). If Pty can possess a customized dashboard
analyzing data and interpreting it will be quicker relevant and easy. This will also help in
reducing fraudulent activities. Since the Digital dashboard with the help of BI can be provided to
every department to ease supervision.
The dashboards assist in creating, sharing and managing reports which will reduce the
company weakness of insufficient documentation. They also assist in annual and quarterly
reporting, monitoring of filings depending on companies unit, submission over time and
geographic regions, it reports on tasks assignments and workload as result the company will be
able to supervise the work of every employee easily and faster as result the internal weakness
will be decreased.
The efficiency of the manufacturing process

Report 11
Currently, several manufacturing companies are obsessed with performance. Because the
current world commodities can be copied easily by superior manufactures and rivals (Fradi et al,
2017). Therefore superior manufacturing and productivity are the only solutions out and since
performance entails indicators and metrics which only digital dashboards and BI can provide as
it permits a company to know where they are and what should be done to be at the top (Fradi et
al, 2017). For Pty CEO the most essential is the top-level profitability, the percentage of timely
delivery and general asset utilization.
The manufacturing dashboards are vital to the company since the world has evolved from
physical counting and recording walking from one place to another in the processing room. At
the same time, customers need their commodities faster which means with dashboard this will be
effective and quicker, hence customers will be satisfied and sales will increase. Hence the
company will have developed to the top and its challenges will be solved eventually. This also
will help to grow the company faster and in a very simple way thus making a lot of profits and
growth.
References

Report 12
Donelson, D. C., Ege, M. S., & McInnis, J. M. (2016). Internal control weaknesses and financial
reporting fraud. Auditing: A Journal of Practice & Theory, 36(3), 45-69.
Fradi, A., Bricogne, M., Bosch-Mauchand, M., Louhichi, B., & Eynard, B. (2017, January).
Decision-Making Support in Engineering Design Based on Collaborative Dashboards:
Integration of Business Intelligence Techniques. In International Conference on
Research into Design (pp. 1037-1047). Springer, Singapore.
Park, Y., El Sawy, O. A., & Fiss, P. (2017). The role of business intelligence and communication
technologies in organizational agility: a configurational approach. Journal of the
association for information systems, 18(9), 1.