Accounting information Systems Case Harvard Case Solution & Analysis

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The benefits of the internal control

In terms of the benefits or impact of the internal control, if the internal control prevents the erosion of value, it would be important to consider the type of the event caused such erosion and assign a value. So, the benefits or the impact of the internal control within an organization are discussed below;

  • The internal control help in protecting the valuable assets of the company and reduce the likelihood of the error, incidents or frauds to greater extent.
  • The value and benefit of the internal control could be calculated on the basis of the cost of the each event. If the intention for designing the internal control is to prevent the accidents, error or thefts what would be the typical cost of each incident?
  • The rate of the occurrence of event: There is a likelihood that the risk would happen and the possibility of the fire could be measured in years but the rate of the theft in the warehouse or store could be based on the number of the work days before inventory count or reconciliation identified the abuse.
  • The value and benefit of the internal control within an organization could be calculated on the basis of the reputation value, goodwill and the customer retention because sometime the poor quality, theft as well as accidents and other type of the accidental events could lead to the customer abandonment. The excessiveturnover of the customer or the lower desire of customer to purchasedemonstrates the lower profit return or revenue over the period of time.

It is pertinent to note that having more internal controls within an organization does not translates into better management of risks. The internal controls consumes money as they are not free but they provide substantial number of the advantages to the company such as it ensures compliance with the laws, rules and regulations, it improve the integrity and reliability of the financials of the company, it improves the efficiency of the business operations and it helps to reduce and prevent the theft, error or any fraudulentactivity within an organization.

As per the analysis in the Risk Analysis Section, the company should include the predeterminedschedule for the payment and billing, which should correspond to the timing of transfer of the company’s services control. The company should keep maintaining the neutrality in the cash overt the contract life. In addition to this, the deliveries should be invoiced in the timely manner as it would result in the sales recorded in the correct period of accounting. Along with this, the company should also prepare the invoices in an adequate manner and ensure that the invoices are not misstated in terms of the discounts, description, price and quantities and so forth. In addition to this, to deal with the problems related to the medical records of the patients;the company is recommended to use the electronic health records,as it would help the company by providing the complete, up to date and accurate information at the point of care and enable the quick and easy access to the records of the patients, for more efficient and coordinated care. Since the Electronic Medical Record (EMR) is one the greater advancements in the healthcare industry, the company could exploit the opportunity of digitalizing the medical record as these records would most likely improve the access to the information or data. It is due to the fact that the relevant data or information is unstructured, unintegrated and soloed in disparate software systems or inconsistently entered.

To deal with the issue of establishing,maintaining and strengthening the relationship with the customers, another recommendation to the IQVIA Holdings is to adapt the customer relationship management (CRM) approach through which the company would be able to manage better and strong relationship with theexisting and potential customers. In addition to this, it would lead the company towards an increased profitability andrevenues, improved efficiency in serving customers, greater employee satisfaction, improvedteam interaction and collaboration and low customer attrition. It would also allow the companyto understand the needs of the customers and strive to meet it exactly.Another technology that could be used to improve and strengthen the relationship with the customer is the transaction processing technology (TPS) as it would process the large amount of data in real time and would improve the customer satisfaction and customer service. Also, the company could be benefited from the characteristics of the transaction processing technology (TPS), which includes consistency, reliability as well as performance.

Section 5: Findings

The current internal controls of the company are the procedures and policies,which include evaluation of the evidence of amount and disclosures in the consolidated financial statement on the test basis. Overall, the purpose of the internal controls within the organization includes the reliability of the financial reporting of the entity, efficiency and effectiveness of the business operations and its compliance with the applicable rules, laws and regulations. One of the internal controls of the company is the audit of its financial statements to assess and evaluate the risk regarding the existence of material weakness. Another internal control is the assessment and evaluation of the risk of various factors and processes that might obstruct and hinder the company from accomplishing its goals and objectives. In case of finding process that is highly susceptible to the error or fraud would be considered the high risk area, due to which the company has designed the control activities to address the identified risks.

In addition to this, the information or data is collected and shared within the company both to people within the organization who are responsible for the financial reporting and operations as well as the external users of the financial reporting. (information and communication). Additionally, the company tends to monitor the effectiveness of these internal controls within an organization and take required corrective actions.The company heavily depends on the security of the communication system or the computer infrastructure, as it helps the company to be protected from the unauthorized access and cyberattacks.The company should rely on data warehouse or application system to maintain and process the data (for example; transaction or other relevant information or data), which is related to the reports, disclosures or accounts used in the operations of the relevant control. Additionally, the management of thecompany should rely on the application system for the purpose of performing the certain automated functions relevant to the audit.

As reliability, integrity and security of the financial information based on the operational controls, change management and proper access controls; the information technology (IT) systems has become more integrated with internal controls and business processes over the financial information. On this basis, the company is recommended to increase its focus on the information technology (IT) controls with core consideration of maintaining the reliability of the business processes. The information within information technology (IT) is fundamental to meet a variety of requirements within an organization,which are as follows:

  • The decision makers rely on the financial information maintained within the IT systems.
  • The increasing complexity of and continuously changing financial reporting.
  • The ability of the organization to meet the demands of the investors and regulators.

The information technology (IT) controls tend to improve the operating performance to greater extent,due to which the company should have IT controls in place, which includes defined process for detecting the unauthorized access, defined consequences and implications for unauthorized or intentional changes and a defined process for the effective management of known errors. Additionally, the company is recommended to use the IT controls for initiating the systematic controls of the ongoing improvements of process and building on data collection requirements and process definition to set aggressive yet accomplishable performanceimprovements objectives and goals. By using the study measures as a basis of the audit as well as the operation shared performancedashboard and focusing the measures on the control activities, which tend to simultaneouslyimproveoperating performance and reduce the risk, which would be the ideal place to integrate operation monitoring activities and IT audit. Also the company should ensure that the IT personnel have well defined and clear goals, roles and responsibilities to ensure the consistency of work towards achieving the organizational goals and objectives.

Section 6: Conclusion

Taking into consideration the problem being faced by the company, which is the application and adoption of the effective internal controls within an organization; the company is recommended to ensure that the activities should be performed effectively and efficiently, use the appropriate application control,which includes field checks and validity checks as it would improve the reliability and accuracy. Additionally, the company should compliance with the applicable laws, rules and regulations and ensure that all the disclosures are fair & complete.

The company should follow the principle of relationship management, in which the company would have new design of processes and process improvement, and the problem solving is undertaken by team and individual based approaches. The communication and collaborations should be maintained amongst employees, in order to work collectively to achieve the objective of quality project. The activities performed during the process of data acquisition might influence the quality of data, which can be easily accessed through audits in order to verify that planning documents including requirements of quality assurance project plan (QAPP) are implemented as they were prescribed before. The audits are critical examination of the quality of project or data. The audits include:

  • Audits to evaluate the performance.
  • Technical system audits.

Both independent assessment and self-assessment must be performed. These assessment must be reported, documented and reviewed by the management. The ultimate motive or purpose of this assessments is to provide clients and management, the quality of results through ongoing evaluation.The results are produced by the data collection activities.

The quality assurance project plan would also describe the procedures that should be followed while conducting audit.Also the checklist or audit plan must be included in it. The designated quality assurance audit personnel should be acknowledged and experienced about the audit activities, and they should be highly independent. There are various audits, which could be conducted:

  • Management audits.
  • Laboratory audits.
  • Performance evaluation audits.
  • Laboratory audits.

The company should also develop an internal quality controls procedures. Internal quality control checks and procedures must be used throughout the project. In addition to this, the acceptance testing and inspection must also be included. The quality control should include:

  • Collect and analyze the quality control samples for laboratory and field operations.
  • Active involvement by quality assurance personnel and project manager.
  • The use of procedures, which are document control.

The company should also follow the principle of quality improvement, customer satisfaction and organizational capabilities. It should also focus on root causes of determination and investigation followed by corrective action and prevention.Also, the accounting information system of the company should provide information to evaluate performance of the response time to inquiries of customers; percentage of sales orders back ordered, time to fill and deliver orders, market share, customer satisfaction rates and sales trends, sales volume in dollars and local currency and market share, sales staff performance, profitability by product, customer, and region,  effectiveness of advertising and promotions, credit policies as well as bad debt expenses.

Furthermore, the control activities should include: rules, procedures and policies that would provide reasonable assurance that the control objectives of the management are met and their risk responses are carried out. This could be done through proper authorization of the activities and transactions, segregation of the duties,project development and acquisition controls, change management controls, design and use of documents and records, safeguard assets, records, and data as well as the independent checks on performance. With regard to the cash inflow policy of the company; it would be significantly important to ensure that the cash inflows are recorded on the daily basis, cash receipts of the company are remitted in accordance with the payment remittance instructions located on the IQVIA invoice and utilization of projection and estimations of cash in determining the cash surplus.

In addition to this, the company is recommended to ensure that the employees within the organization are entitled to complete their work without any biasness, which could stem from the overlapping of the workdone at different levels of organization. By doing so, the company would be able to prevent or reduce the exposure to frauds, risk and errors successfully. The automation has become increasingly important, given the dependence on the automated controls including output controls, input processing, access control, calculation and segregation of duties. To ensure that the controls are efficiently operating; the company needs to monitor the internal control, which involves the use of the evaluation by third parties of control and management in place to identify problems and communicate those problems for corrective actions to be taken.........................................


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