Internal Control Weaknesses and Solutions at Classic Restorations

Classic Restorations' current system certainly has some internal control weaknesses. One issue is the manual preparation of purchase and ordering documentation, which increases the risk of errors and physical loss or damage. Moreover, the physical filing of checks and cash disbursement vouchers may not be secure and makes data retrieval difficult and time-consuming. Furthermore, the system’s reliance on standalone department PCs isolates financial data, creating inefficiencies and limiting insight.

A redesigned computer-based system should definitely mitigate these weaknesses. For instance, implementing a fully digital, integrated Enterprise Resource Planning system (ERP) could streamline operations. This would allow all data to be entered electronically and accessed across the organization, reducing errors and improving efficiency. For better physical internal control, the system should incorporate approval processes with different individuals responsible for different parts of it, such as order creation, approval, and order fulfillment. This would improve segregation of duties and reduce the risk of fraud or misappropriation. Moreover, cash disbursement should be automated through bank transfers, thereby enhancing security.

By addressing these physical internal control weaknesses and improving the system through digital solutions, Classic Restorations can enhance efficiency, accuracy, and security in its expenditure cycle procedures.