I.

INTERNAL CONTROLS IN A GROCERY STORE

1. Installations of Convex Mirrors and CCTV Cameras

Convex mirrors are a convenient option for grocery stores that require
monitoring. When put on the wall or shelves, it provides a very nice viewpoint and can
show a new aspect of the grocery store's goods. Security mirrors, when properly
positioned, warn staff of danger or theft. It might be tough to prevent stealing, but convex
security mirrors offer low-cost, high-impact security and anti-theft solutions. Aside from
the convex mirror, the grocery store owner should also install a CCTV camera. Security
cameras strategically placed throughout a company aid in preventing crimes and break-
ins. It has the potential to improve the overall security of the grocery store. Video
surveillance can assist in the prevention of shoplifting, fraud, and staff theft. A solid
security system, including security cameras, also tells your clients that you care about
their safety and security, which may boost their overall opinion of the grocery store. The
employees are protected both directly and indirectly by video surveillance security
cameras. It also saves money on legal fees from fraudulent or dishonest accusations.
One of the most dreadful experiences for any business is being sued. If an accident,
injury, harassment, or other legal concern happens on-site, having video proof can help
show what happened.

2. Emergency Exit Routes

In the layout assigned to the group, we noticed no sign of an emergency exit

route which is an essential part of a building. The grocery store owner should make an
emergency exit as it saves lives in hazardous situations and should be prioritized in the
grocery store. Employees and customers can sustain significant or even fatal injuries if
they do not exist or are inadequate in any manner. Any dead-end passageways, closed
doors, equipment, or materials must not block exit routes. Blocked or obstructed
doorways and paths can easily cause delays, causing fear and uncertainty among
building inhabitants. The directions should also include signage directing people where
to go if it is not evident. The grocery store should at least make two emergency exit
routes because, as a business owner, you know the importance of safety for your
employees, customers, and any other visitors on your property.
 3. Segregation of Duties in the Cash Handling Process

A lack of division of duties is a crucial contributing element in all fraud cases and
is frequently discovered as a vulnerability during post-analysis of system breaches.
Segregation of responsibilities entails dividing the stages in critical processes among two
or more persons. No single person may act alone to undermine an operation for their
own advantage or goals. Employees that are hired can use their lawful access to the
organization's assets for several objectives. As a result, rules and processes must
address personnel security at the time of employment and as an ongoing activity to
manage the risk of current employees and contractors attempting to exploit their access
to the grocery store’s facilities, assets, and data.

Although managers cannot control their workers' intentions for committing fraud,
they may create an environment and implement policies that limit the number of
possibilities for employees to take advantage of their position within the business. For
example, one person may open envelopes containing checks while another logs the
checks in the accounting system. This decreases the possibility of cheques being taken
from the firm and deposited into a person's personal checking account. One person
keeps track of cash received from consumers, while another generates credit memos for
them. This limits the possibility of an employee diverting an incoming payment from a
client and covering the theft with credit to that customer's account.

The following table shows an example of the segregation of duties in terms of

cash handling:

Responsibility Duty Category

Cash receiving (cashiering) and counting cash as Asset handling Employee 1

part of the cash drawer closing process

Deposit preparation and the recording of cash Booking Employee 2

receipt on deposit records/logs

Recording the deposit Booking Employee 3

Making the cash deposit Asset Handling Employee 1

Comparing cash deposits recorded in the general Comparison/Review Employee 4, 3,

ledger to deposit amounts appearing on copies of and 2
departmental records/logs

4. Regular Inventory Check on Perishable Goods

Inventory checks are needed to ensure that there would both be a quality and
quantity check on the products to be sold. Quantity checks are required to provide a
proper matching between the number of items sold on the company books/records and
the number of items sold in accordance with the inventory count. And also, this is to
ensure that any material differences between the two will be investigated immediately.
On the other hand, quality checks are needed so that the customers can buy the
products at their best quality and avoid putting the customer at risk of any health and
safety complications from consuming a product. Quality checks are also needed to
ensure that there would be fewer sales returns for the company. Quality checks should
include regularly checking, and disposing of defective products displayed, disposing of
defective products before being displayed, disposing of expired products, and so many
more.

We also emphasized perishable items in this suggestion, and it's because, unlike
a damaged non-food item where a defective product would not put a customer's life in
harm's way, a defective perishable item might cause severe damage to consumers if
they consume that product. And not only that, a leaked or even a single faulty product
might cause an entire box of perishable goods to be contaminated, which would mean
lost revenue and added costs for the company. So the grocery store should be doing
more inventory checks on food or perishable items. And they can ask some rank and file
employees or let inventory managers do a thorough inventory check to do a physical
count and do quality checks on the products to be sold. This internal control method
would minimize integrity and health and safety risks, among others.
5. Training Employees on Food Safety Procedures
The importance of food safety procedures cannot be understated. Employees
should be trained to follow the necessary food safety procedures. Food safety
procedures such as having a clean storage place for raw food, segregating cooked food
from raw food, placing food in their proper containers, and other food safety procedures
should be taught to rank and file employees. This is to minimize product obsolescence
risks and health and safety risks. Not following the basic food safety procedures can
cause increased product recalls and could also lead to potential lawsuits from customers
being harmed by the products being sold by the company. And not only that, the
company’s reputation would suffer due to unsanitary food safety practices. It is now the
job of inventory managers to train these rank and file employees. Maybe hiring someone
who specializes in food (like hotel and restaurant managers or chefs) could also train the
employees in dealing with perishable items. It is simply not enough that the company
would only need to train rank and file employees; it is the inventory manager’s job to
retain and make sure that the company's food safety practices are constantly being
applied when dealing with perishable items. Having consistently hygienic food safety
procedures would avoid any potential product obsolescence and health and safety risks
the company might have. The company should also be conducting regular meetings with
employees to achieve consistency in this particular internal control activity.

6. Ensure Adequate Lighting and Electricity

Lighting is an essential part of any business. A business with dim lighting could
be at risk of health and safety risks since the customers would be prone to accidents as
a result and integrity risk from both customers and employees as it would be an
opportunity for them to do theft quite easily. Putting up cameras in strategic parts of the
store might be a useless tactic if some areas are not well lit. So as a result, the company
should always ensure that there is adequate lighting in all store areas. The company’s
head electrician or the building manager should consistently implement regular
checkups on the store’s lighting. Any defective lights should be replaced so as to make
the company look as lively and as clear as possible. And in the case of power outages,
an emergency light might prove to help light up the area until such time that the power
outage is resolved.
 Another area of concern is electricity and the frequent problems of power
outages. The company should invest in generators since unpredictable power outages
can cause multiple business interruption risks, especially now that the counter system of
the company is automatic. Equipment such as refrigerators and freezers require
electricity to function, causing multiple products to potentially go spoiled if the power
outage takes a long time to resolve. But with a generator, business interruption risks
incurred from the power outage might be reduced, and business might go on as usual.
The company’s technical team and the building manager should be in charge of
purchasing and managing the generators for them to perform at their maximum capacity.

7. Visit the Grocery Store Unannounced

This is part of the Grocery Manager's task to properly assess the well-being of
the customers, the store, and the performance of the employees during working hours.
When visitations are unannounced, the employees will be ensuring that they are on their
feet all the time, giving their best in making sure that the store is well-organized,
customers are being attended to and that they are not slacking off on their duties and
responsibilities. The manager can conduct surprise cash counts during such visitation to
track employees' unusual activities and purchases. This is part of ensuring that financial
transactions are recorded accurately. Any fraud and misdeed on the employees will be
caught in the act. Thus, they will be more considerate in keeping the integrity of their job
in safeguarding the entity's assets and maintaining the financial reports accurately.

With this conducted randomly, without any particular schedule, proper

disciplinary actions can be done right off the bat against fraudulent, neglectful, and lazy
employees. Thus any risks related to behavioral problems of such employees can be
mitigated right away, avoiding higher costs for the store.

8. Employee's Job Satisfaction Evaluation for Employee Retention

Multiple facets of a grocery store are impacted by employee turnover. According
to Barry Berman's book, "Competing in Tough Times," organizations with low employee
turnover have more significant customer satisfaction. Employees that have worked at the
store for a long time are familiar with the customers, the store, and their responsibilities.
This reduces the amount of time and expenses on recruiting, employing and training
new personnel. Employee retention is also crucial for inventory management and
 customer service. For example, errors in inventory control or customer service are more
likely to be made by new staff than by more experienced ones. It's also a waste of time
and money if a store's staff depart just after becoming comfortable with the position.

In the grocery industry as a whole, staff turnover costs are 40 percent higher than
profits, according to a report by the Coca-Cola Retailing Research Council. This explains
why supermarkets are closing at such a rapid pace. Having such a high turnover rate
makes it impossible for certain businesses to continue operating.

The role of organizational leaders, particularly human resource managers, to

manage and decrease employee turnover is crucial for retaining loyal and efficient
personnel and enhancing the organization's performance, productivity, profitability, and
sustainability.

Employee job satisfaction is an essential factor in reducing their intention to quit

an organization. The turnover rate at Whole Foods Market is under 15 percent.
According to Williams's book, the organization aims to empower its workers by providing
them with greater pay and more opportunity for incentives than typical grocery stores.
Wegman's has a low staff turnover rate of only 7%, with 20% of its staff sticking with the
firm for 10 years or longer on average. At Wegmans, employees enjoy better pay and
benefits than at most other supermarkets. However, the most important aspect is that it
provides workers a significant degree in making decisions. In doing so, the firm helps its
employees feel more appreciated and stimulates their work. These enumerations can be
applied to the said grocery store - Aldi.

9. Proactive Preventative Safety System and Umbrella Insurance

It's no surprise that grocery store slips and falls are so widespread, given the
abundance of liquids on the shelves. In high-traffic sections of a grocery store, accidents
occur owing to slippery and uneven surfaces, poor lighting, and sticky items left on the
floor. The National Floor Safety Institute (NFSI) estimates that 55% of floor-related slips,
trips, and falls are directly caused.

Management and owners of grocery stores may minimize the risk of injury by
developing a proactive preventive safety strategy after determining the causes of such
 incidents. Routine maintenance is a must for well-functioning establishments, and it's a
critical necessity for ensuring the safety of employees and customers. One employee
each shift should routinely examine shelves and displays for damaged or spilled
products that might constitute a slipping hazard if allowed to accumulate on the floor. In
addition, improving or altering walking surfaces is the next step in preventing slips and
trips. To further improve safety and lower the danger of falling, surface re-coating or
flooring replacement, mat addition, pressure-sensitive abrasive strips, and metal or
synthetic decking installation.

Even if you adhere to best practices, accidents may still occur, and substantial
claims may be filed. Adding an additional layer of protection with umbrella liability
insurance may assist grocery stores in weathering the most severe storms. Sometimes
the cost of a lawsuit might become exorbitant. Umbrella insurance, commonly referred to
as excess liability insurance, may provide the additional funds required in the event of a
big lawsuit. Grocery shops may benefit from excess liability insurance for Slip and Fall
Lawsuits, Customer Property Damage, and Slander, Libel, and Other Advertising
Injuries.

10. Functional and Efficient Organization of Goods

In a grocery store, it is to be expected that all sorts of products are present,
varying from raw foods such as meat, veggies, and fruits to already cooked goods such
as bakery goods, goods in cans, containers, and plastics. This places a greater need for
labeling sections, grouping products into their purpose and kind to provide the easiest or
most efficient route possible for the customers to find the goods they opt to buy. In this
activity, the persons held accountable would be mainly its manager and the employees
assigned for the grocery store’s internal layout design. It entails that there would be
Department labels large enough to be visible right away from the entrance. Along with
this activity, employees must ensure that enough distance is placed between products
containing toxic chemicals and those to be cooked and eaten. That is why household
items are placed more preferably together with the cleaning products on the side
opposite the “Produce Department,” wherein the meat, seafood, and fruits and veggies
sections are lined up. Finally, In each department, products must be sectioned according
to their composition or state so that similar products are grouped and easy to access.
For example, in the Produce Department, the freshest and most seasonal foods that are
 more likely to be the cheapest should be placed in front while the priciest and not in its
season should be put at the back. In the meat department, there should also be sections
for the frozen packaged goods separating them from those cut to order, wherein in large
groceries, there would be a meat counter for butcher services.

Proper organization of goods provides access for customers and easy inspection
and inventory checking for the assigned employees since products are already
categorized. Likewise, employees can easily observe customers, provide assistance and
manage security when they know precisely the locations for all varieties of products.
Moreover, management will be able to avoid risks for ill-tempered customers who
constantly complain about the location of a particular product, traffic for customers who
have to cross paths with other people, and other operational risks that could occur in
grocery stores brought by the inefficiency of the layout and lack of labeling or sectioning
of products.

11. Introduction and Establishment of the Information System

The information system is an integrated set of components for collecting, storing,
and processing data. Retail businesses and other organizations rely on information
systems to carry out and manage their inventories, operations, data on transactions,
suppliers, and customers, and compete in the marketplace. The information system
varies from one business to another. The data and resources used by the system make
extensive use of information technology depending on the needs of the specific
enterprise.

The information system relative to financial reporting, including the accounting

system, consists of the procedures and records designed and established to ensure that
the information required is accumulated, recorded, processed, summarized, and
appropriately reported in the financial statements. Manual systems are easy to use, cost
next to nothing, and are still effective. But businesses like grocery stores need to be
flexible enough to adapt to changes to match their growth and needs. With the grocery
store adapting the information system, it would be easier to prevent accounting
information and financial reporting risks. Moreover, the system helps strengthen and
improve the business' internal control. With information systems, the inspection of
transactions and financial statements is more swift, accessible, and automated. Errors
and mishaps are easier to trace and identify. The accuracy and completeness of the
accounting information and financial report are more assured and accurate. The
information system relevant to business operations includes inventory, customer
relationships, and human resource management.

Inventory management tracks inventory, orders, sales, and deliveries. It would be

a tool for the business to avoid operation and product risks while upgrading its internal
control system. With inventory management, it will prevent the overstock and outages of
products. Tracking perishable goods and expiry dates is more straightforward and in
control—sorting inventory data into categories with accuracy and easy access.

Customer relationship management looks at store data about the grocery store's
customers. It includes loyal customers availing of the subscription, membership, or
qualified customers for promos and freebies. With the information system present, the
customers' data is guaranteed secure and safe. It eliminates operation risks, like a
breach of customers' information. It will avoid damaging the business's reputation, an
integrity risk.

Human resource management collects and stores data on the business'

employees. With the information system present, the sortation of employee data and
departments is quick and easily accessible. It monitors changes to anything related to
employees and their data. The human resource department will also use the data for
compliance reasons. It includes material for identifying employees in case of theft, fraud,
or other misbehaviors. Having an information system under human resource
management strengthens the business's internal control by a more secure software to
store and collect data. It avoids operational risks such as security breaches and the
release of confidential employee information. It also helps the human resource
department keep track and check the employees working hours, salaries, and
accommodations granted by law.

The grocery store owner needs to see that a manual system cannot match the
advantages of the information system. The latter method is less time-consuming, more
accurate, accessible, and secured. Information system makes the work more efficient
and makes the business's internal control firmer. It targets the avoidance of risks that
 may occur within the industry. As the business grows, the owner should see that
introducing and establishing an information system is an investment that the company
will reap in the future. Once the introduction and establishment of the information
systems occur, hands-on training for the employees should follow.

12. Authentication and Authorization to Information System

In connection with the introduction and establishment of the information system
of the business, authentication and authorization are essential keys to making the
system work efficiently and, at the same time, secure.

Authentication verifies the identity, and authentication enables authorization. The

concept of authentication is a vital process. In this way, the security of the information
systems challenges the individual to prove their identity. The use of identification cards,
usernames and passwords, and thumbprints are mediums to authenticate the identity.
Customers must have identification cards provided by the grocery store to ensure that
they are subscribed to a particular subscription or membership. Employees must also
have identification cards with barcodes read and authorized by the system to ensure
their identity. Managers and supervisors must have additional authentication when
accessing specific parts of the information system.

Authorization is a security method used to control access to information system

resources such as files, data, and information features. It is the process of providing or
refusing access based on the user's identification that provides the user access to
multiple information systems. Under authorization are different access controls:
discretionary access control, mandatory access control, and role-based control. For
discretionary access control, the business owner can decide who has access to what
part of the information system and can divulge authority for administration. For
mandatory access control, the system administrator defines the criteria for the level of
access, and the users cannot alter it. Mandatory access control works by assigning each
file system object a classification label. There are three levels of classifications, namely,
confidential, secret, and top secret. Each user and device on the system is classified and
cleared at the same level. Lastly, role-based access control restricts information system
access based on a person's role within an organization and has become one of the
methods for advanced access control. The roles in access control refer to employees'
 levels of access to the information system. Employees can only obtain the data they
need to do their jobs efficiently. Access can be based on several factors, such as
authority, responsibility, and job competency. In addition, access to other information
systems can be limited to specific tasks, such as the ability to view, create, or edit a file.

Everybody in the business is involved in this process. Nevertheless, it is the

responsibility of the owner, supervisor, and managers to lead and ensure that the
process is done correctly. The authentication and authorization process secures the
information system and the business itself. It adds a different build to the designed
internal control of the grocery store, for this is a supporting process once the information
system is established. The significance of authentication and authorization help prevent
unauthorized data entry. It abates operational risks, such as breaches of the system and
the technology itself.

13. Placing Anti-theft Tags on Small and Expensive Items to Eliminate Theft and
Shoplifting
Unfortunately, supermarket theft is a common practice that can cause significant
problems for the business, given the alarming percentages of this phenomenon, which
severely affects the operations from a financial standpoint.

The Security managers oversee the security operations of organizations. They

devise security strategies, enforce security protocols, and oversee security personnel.
They may be deployed in a variety of settings, from enterprises and warehouses to
residential communities. Using anti-shoplifting systems is undoubtedly the most common
form of defense. The tags are made up of three main parts: an electronic antenna, a
deactivator/detacher, and an electronic tag. The antenna is typically placed near store
entrances and exits. This creates an invisible gate because the antenna detects an
active tag passing by and triggers an alarm. Store employees can easily deactivate the
tags during checkout using either a deactivation pad or a detacher, which releases the
hard tag pin.

This would improve customer service because it can help shift store employees'
focus from security watchdogs to providing excellent service.
14. Pre-employment Background Checks
When an applicant becomes a candidate for hire, background checks are usually
performed after the initial interviews and tests. They are carried out by either the
company's human resources team or a third-party agency. It is generally performed on
job prospects throughout the pre-employment process. It often entails establishing
whether an applicant is ineligible for a position due to a criminal conviction, vehicle
violations, poor credit history, or school or work experience fabrication. Since over 53%
of job applicants disclose false information on their applications or during the interview
process, background checks guarantee that potential new hires are telling the truth.

A primary reason for doing thorough background checks is to avoid various sorts
of harm or legal liability to the employer or others and defend against legal claims such
as negligent hiring. A multilevel jurisdictional criminal history check can be solid
evidence that the employer took proper hiring precautions.

15. Regular Performance Evaluation

Just as suggested in the book, Corporate Governance, Business Ethics, Risk
Management and Internal Control by Cabrera et al., a grocery store, like all other retail
companies, requires a performance review to assess the company's performance
through accounting and operating data. In a grocery store, this can be performed by the
manager himself or specific personnel tasked with this role. A performance review will be
conducted periodically to create a comparison between the actual results and the
forecasts, prior period performance, or with a certain competitor's financial reports.
Moreover, such evaluation can help make reasonable environmental control over the
store's finances. As the activity performance of employees is being regularly monitored,
any inconsistent results can be easily reasoned out through indicators such as the
number of inventory purchases and its price variances.

In the case where the grocery store is merely one of the branches all across the
country, personnel can conduct a performance review on the store to analyze the
performance of its manager. As an outsider, the personnel can better make impartial
judgments or assessments and provide more reliable critics. Through this, any reliable
improvement can be implemented to provide better results in the next period.
II. ESSAY QUESTIONS
1. How does the governance function affect the internal control structure of the
organization?
The way that you or the company will govern affects the internal control structure
of the organization in such a way that the methods or the style that you or the company
have placed upon will determine the control environment of the company, which sets the
tone for the effectiveness of the company's internal control structure. A company's
control environment can be reflected through the company's governance. Setting up
objectives, participation of everyone involved, assigning authority and responsibility, and
setting up policies, procedures, and organizational ethics are some things that the
function of governance can do that affect the organization's control environment as a
whole. Among all the components, the control environment sets the tone for how the rest
of the components follow. And by setting up the entity's control environment, it will follow
the internal control system that the company will have. That would mean that a well-
governed company will have a good control environment, leading to a more effective
organizational control structure and vice versa. So, in short, a company's governance
will reflect the kind of internal control structure that it will have since a company's control
environment is influenced by various governance functions such as setting up the
company objectives, organizational ethics, assignment of authority and responsibility,
and many others.

2. Why do you think risk assessment is a component in the internal control

structure?
As part of the five components of an internal control system, risk assessment and
all the processes involved in it are very integral to ensuring that an entity has prepared
plans, programs, and actions to address potential risks that can disrupt the proper
recording and reporting of transactions in the financial statements of an entity, with a risk
assessment. Risks, together with their likelihood, are first identified. The management
then can list its possible impacts and ways they would do to mitigate them. Those two
aforementioned steps comprise the evaluation of the initially identified risk. It is also
essential to consider small risks during the process since, when interconnected with
other events or conditions that may lead to vulnerabilities, they could provide significant
opportunities.
 Furthermore, for financial reporting risks, a risk analysis for each financial
statement line could be performed, and risks could be ranked based on potential
material misstatements due to errors or fraud from low to moderate to high, followed by
identifying key controls. In this process, the management may identify significant cycles,
such as underwriting, claims, investments, treasury, and financial statement closing and
reporting, and determine possible errors in those cycles. Management then puts in place
key controls to reduce those risks.

Overall, a thorough, iterative risk assessment is integral to a company as it raises

awareness of the internal and external risks that may jeopardize its ability to meet its
objectives. Ultimately, it aids in the development of a roadmap and processes for
establishing internal controls to mitigate or minimize risks depending on its risk appetite.

3. Why do you think that compliance to laws and regulations has been included as
one of the objectives of the establishment of the internal control structure in the
organization?
Internal control is the process designed to accomplish the one goal of an
organization: to operate effectively and efficiently. For this goal to be achieved, we go
back to the three objectives of internal control; the reliability of the entity's financial
reporting, the effectiveness and efficiency of the entity's operations, and the compliance
with applicable laws and regulations.

The reliability of the entity's financial reporting and the effectiveness and
efficiency of the entity's operations become insignificant without compliance with laws
and regulations. Laws and regulations are present and vital for a reason - it is a code
and a guideline for what is accepted. The eradication of compliance with laws and
regulations breaks down the internal control system. It becomes meaningless and
useless.

It is a domino effect - one falls, and the rest follows. The efficiency and
effectiveness of the business rely on its internal control system. The system's design
should comply with applicable laws and regulations suited for the entity. How can the
entity's financial reporting reliability be assured when the framework under this objective
does not incorporate adherence to specific laws and regulations? How do business
 operations become effective and efficient if the process does not incorporate laws and
regulations?

Internal control is the part of the process designed to accomplish the entity's
goal. Compliance with laws and regulations is executing the said process that was
designed. This objective has been included in the internal control system because it is a
potent piece for everything else to be functional - to make the internal control system
work its purpose.

4. Recommend at least 2 internal control activities that should be in place to ensure

the accuracy and completeness of payroll transactions in the expenditure cycle.
Explain the internal control and its purpose.

Errors and inconsistencies concerning the accuracy and completeness of payroll

transactions have often gone mostly unreported in the past. If the group were to
recommend two internal control activities that can be established to prevent these errors,
it would be the proper authorization of transactions and activities, and the segregation of
duties.

Proper authorization of transactions and activities plays a crucial role in the

accuracy of the payroll transactions since this control activity shall require all
transactions and operations to be carried out and approved by employees working within
their scope of knowledge and control. Proper authorization policies prevent improper
transactions from happening in the first place. Of course, before anything else, the
management should make sure individuals authorizing transactions should either have
direct knowledge of what they are approving or analyze supporting paperwork to ensure
that transactions are legitimate and suitable. Employees are kept informed of their duties
for reviewing transactions before approval in a solid internal control system. Thus, with
the transactions and other activities within a company or a business adequately
authorized and reviewed, the auditor of the establishment may be reasonably satisfied
with the fact that such documents were executed in a manner consistent with the
company or business policy.

The segregation of responsibilities among employees decreases the possibility of

any individual being able to both perpetrate and disclose mistakes or fraud in the usual
 course of their duties. Dividing the following roles is an effective starting strategy to
minimize fraud. This control activity is an essential component of the internal accounting
control system because this ensures the reliability of the accounting records and the
payroll transactions data. This is due to the fact that no single employee will have
complete control over the company's finances. Furthermore, division of duties can aid
with compliance with SOX (Sarbanes-Oxley) standards. Moreover, it can help boost your
business's internal controls and overall efficiency.

5. Recommend at least 2 internal control activities that should be in place to ensure

the safeguarding of machinery and equipment and ensure that transactions
related to them are performed accurately and consistently. Explain the internal
control and its purpose.
Much of a firm's total assets are heavily weighted toward its investments in
machinery and equipment. Maintenance, rearrangement, and depreciation of these
assets are substantial costs on the income statement. The group will recommend three
internal control activities to ensure the safeguarding of machinery and equipment and
the accuracy and consistency of related transactions. It would be having a subsidiary
ledger for machinery and equipment, having an annual plant budget, and a Seminar for
Security Managers.

The use of a subsidiary ledger, which has a record for each unit of property, is an
essential control for machinery and equipment. Specific general ledger account balances
are maintained in a sub-ledger or subsidiary ledger. Attributed to the reason that general
ledger accounts only provide an ending balance for each account, subsidiary ledgers are
utilized to convey the details that result in this general ledger balance. Ensuring accurate
depreciation, verification of maintenance costs, and comparison of authorized
expenditures with actual costs are made easier by having a piece of well-maintained
machinery and equipment ledger.

To predict and control the procurement and retirement of equipment and

machinery, auditors should look for an annual plant budget. Plant, equipment, and
machinery accounting records must be in place before a plant budget can be effectively
used. Intelligent forecasting of future equipment needs is impossible without a thorough
 understanding and knowledge of the present equipment's types, numbers, and
conditions.

Having a good seminar for security managers is beneficial for any firm because it
allows them to independently decide what to do if any incidents occur and can easily
take control of the situation. They are expected to be familiar with their employer's key
systems and technologies, such as access control, intruder detection, perimeter security,
and CCTV. Managers in charge of a CCTV control room must ensure that their video
surveillance systems are used correctly and in accordance with the Information
Commissioner's Office's Public Space Surveillance Standards.

The task of system monitoring is not as difficult as it may appear. Many

monitoring tasks can be executed periodically throughout the day during even the
briefest free moments by security managers. By implementing the commands frequently,
the manager will quickly become familiar with seeing "normal" activities and become
better able to spot things out of the ordinary. The most important aspect of a monitoring
system is that it is done on a regular basis.

III. REFERENCES

Atkinson, R. (2019, April 17). Controlling slips and falls. 2019–04-17 |

Supermarket Perimeter. https://www.supermarketperimeter.com/articles/3464-
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