respond to your classmate’s post below:
respond to your classmate’s post below:
The six principles of control activities are as follows.
Establishment of responsibility: Assign responsibility to specific employees. Most effective when only one person is responsible for a given task. Often requires limiting access only to authorized personnel, and then identifying those personnel
Segregation of duties: Different individuals should be responsible for related activities. Responsibility for record-keeping for an asset should be separate from physical custody of that asset. The work of one employee should, without a duplication of effort, provide a reliable basis for evaluating the work of another employee
Documentation procedures: Documents provide evidence that transactions and events have occurred. For example, point-of-sale terminals are networked with a company’s computing and accounting records, which results in direct documentation. Documents should be promptly forwarded for accounting entries to the accounting department to ensure timely recording and ensure the accuracy and reliability of the accounting records.
Physical controls: the safeguarding of assets and enhancing the accuracy and reliability of the accounting records. For example, safes, locks on warehouses and cabinets, passkey or fingerprint access to computers, alarms, television monitors, and time clocks, as shown here.
Independent internal verification: Involves the review of data prepared by employees. Useful in comparing recorded accountability with existing assets. To obtain maximum benefit independent employees should verify records periodically or on a surprise basis also, report discrepancies to management
Human resource controls: Bond employees who handle cash.Involves obtaining insurance protection against theft by employees. Rotate employees’ duties and require vacations. Deters employees from attempting thefts since they will not be able to permanently conceal their improper actions. Conduct background checks
The two most important principles for an online retail business vs. a brick-and-mortar retail business are:
(1) Segregation of Duties is crucial for both online and brick-and-mortar retail businesses, but it might be even more critical for online retailers. In an online environment, many critical functions, such as processing online orders, handling customer data, and managing payment processing, are often conducted electronically. Segregating these duties helps reduce the risk of fraud and ensures that multiple people are involved in critical processes, enhancing accountability and security.
(2) Physical Controls: While physical controls are traditionally associated with brick-and-mortar retail businesses, they are also relevant for online retailers. Online retail businesses need to focus on the physical security of their data centers, servers, and inventory storage facilities. Protecting these physical assets is essential to ensure the integrity and availability of online services and customer data. All six principles of control activities are important, segregation of duties and physical controls are particularly crucial for both online and brick-and-mortar retail businesses.
Resources:
Kimmel, Paul D., et al. Accounting Tools for Business Decision Making. 8th ed., Wiley, 2
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