The purpose of this memo is to explain to the Sisters the various concepts which are related to accounting and what affects their business specifically ( Wells, 2017) . Also, the memo highlights what subsidiary ledgers and special journals are and how they should be used by the business. Moreover, the memo depicts the different ways freight costs can be handled ( Hitchcock, 2018) . Lastly, the memo points out what internal control is, the principles of internal control activities, and how these principles can be applied to cash receipts and disbursements.
Internal Control and Accounting Control Systems and The Fraud Triangle
Internal control involves accounting and auditing: this process assures attainment of the objective of the organization by ensuring it runs efficiently and effectively. At the organization level, the objectives of internal control related to compliance with laws and regulations, the timely response on the accomplishment of operational or strategic goals and dependability of financial reporting ( Mua, 2016) . Internal control is crucial for companies because it helps in detection and prevention of fraud, this is through identifying circumstances in which loss or theft occur and determine if the present control measures are effective ( Wells, 2017) . Since HHEC deals with merchandizing, the internal control system will greatly help track each merchandize and expose any loophole that can be used to still the merchandize. However, Accounting control system is procedures implemented by an organization to aid in ensuring that the financial statement and record of goods are accurate and valid. In our case, HHEC can use Accounting Control Systems to track down the validity if their financial statements ( Hitchcock, 2018) . If the statements are accurate, it reflects correct and accurate merchandising. However, if financial statements have deficits, it implies that merchandizing is incorrect either because of theft or loss.
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The fraud triangle is an outline projected to elaborate on the reason behind workers committing fraud at the workplace ( Hitchcock, 2018) . The three phases, characterized by the outcome on the individual, can be abridged as rationalization, opportunity, and pressure. The three stages of the fraud triangle will help HHEC to determine why its workers engage in frauds. Also, the fraud triangle offers a solution to the frauds.
Subsidiary Ledgers and Special Journals
Subsidiary ledgers keep track of specific balances ( Hitchcock, 2018). The subsidiary ledger emancipates the general ledger from the minutiae of individual balances ( Wells, 2017). Subsidiary ledgers should be used to store specific types of accounting transactions for HHEC: this will help keep track of all merchandize of the company. A special journal is a group of same accounts whose joint balances is equivalent to the balance in particular ledger account ( Mua, 2016). Special bonus can be used in HHEC in the manual accounting system; it reduces the tedious task of recording both the credit or debit and general ledger account of the company.
The Different Ways Freight Costs Can Be Handled
Contract steady lane volume
Ship on off-peak days
Find a consolidation program near you to handle smaller shipments
Don’t be a serial rate shopper; develop relationships
Increase delivery lead times
Internal Control
Internal controls are the procedure, rules, and mechanisms instigated by a firm or organization to ensure the integrity of accounting and financial information, prevent fraud and promote accountability ( Wells, 2017).
Principles of Internal Control Activities
Create responsibilities
Uphold records
Insure assets by bonding significant workers
Separate of responsibilities
Compulsory employee rotation
The principles of Internal Control Activities are essential in for any business especially organization HHEC since it helps in ensuring the receipts and disbursements of the company is valid and accurate ( Hitchcock, 2018).
In conclusion, the concepts that I have explained in the memo is very detailed and hence very educative. Therefore, after reading this memo, you will be able to understand your organization and staffs in detail.
Please let me know if you have any questions or comments .
Yours Faithful
References
Hitchcock, M. (2018). The Importance and Implications of Forensic Accounting in the Financial World.
Mua, K. (2016). Forensic Accounting in Market Expansion: Google and the Chinese Market.
Wells, J. T. (2017). Corporate fraud handbook: Prevention and detection. John Wiley & Sons.
