Internal Auditing Case Study Example | Topics and Well Written Essays - 500 words

Internal Auditing - Case Study Example One of the internal control mechanisms that the organization failed to utilize optimally is preventive control. Preventing control in internal auditing is essential because it is the first barrier that protects the organization from risks that are detrimental to its performance, growth and financial stand. The principal risks are operating errors, technological malfunction, negative regulatory pronouncements such as unfair suspensions of employees, and fraud. In Krenik’s case, the risk that internal audit failed to stop was Fraud. Had there been a strong internal control, the organization would have developed a transparent payment system such as e payables systems that would have prevented fraud (Rezaee, 2002). Detective control plays a key role in spotting irregularities that have already happened within the organization. The aim of detective control is to develop necessary methodologies and tools that can easily spot errors and irregularity within the functional areas of the organization. In this internal auditing measure, internal auditors are useful when testing risky processes and procedures. In Krenik's case, the organization failed to detect fraud because it did not have an ardent detective control mechanism that would have detected financial malpractices and it took the intervention of the bank to detect the fraud. Failure to regularly reconcile financial documents between US Airforce and the supplier and inability to make appropriate and regular follow -up of payment procedures provided a loophole through which fraud occurred (Frigo, 2002). Corrective control in internal auditing assists in correcting irregularities and errors that have been spotted within the organization’s financial data and operations. In Krenik’s case, the corrective measures to prevent future frauds are developing strong preventive control measures such as prompt and through reconciliation of transactions with the suppliers, developing an electronic payment system that is efficient and fast, and conducting regular checks on financial statements’ information.

Details summary of the book Simplexity Essay Example | Topics and Well Written Essays - 500 words

Details summary of the book Simplexity - Essay Example Kluger described that the stock market is basically very similar to a school of fish in that the behavior of stock owners is usually influenced from one to another. As one stock owner sells due to his tips, analyses, or gut feelings, many people follow suit because it appears to be the right thing to do. Other scientists, such and Blake LeBaron have a complex formula to describe stock behaviors that is very difficult to understand. This simple exercise emphasizes the difficulty in a single event to understand what is complex and simple. Kluger explains that the Sante Fe Institute is a think-tank designed for scientists to determine what defines simplicity and complexity regarding multiple issues that we take for granted in everyday life. Chapter 2 begins with the story of Ed Schmitt, who was working at Tower Two of the World Trade Center on September 11, 2001. He watched as the first jet plane collided with Tower One and then recalled the chaos of people frantically cramming the stairwells to evacuate Tower Two. The management staff and Vice President made an announcement for all employees to seek shelter by remaining at their desks and this caused the deaths of thousands of people from Tower Two. Kluger attempts to show the complexity of the situation as people entered a state of chaos and worked to evacuate, even by disobeying the orders of business executives. The architecture, failures of emergency-predicting software, the concept of milling – or standing around to analyze the problem – all contributed to the problems these people faced, and none of them were simple problems. Scientists at the Sante Fe Institute compare the behavior of people during evacuation to that of water as it moves chaotical ly through a limited area to reach the opening at the end. Psychologists take into consideration the multiple thoughts that people