Internal Control Case Study

Statement of the Problem

The study intends to investigate the following:

1. What are the assessments of the management’s internal controls in preventing employee fraud of merchandising businesses in Lipa City?

2. What are the differences in the approach of the managers in assessing the design of internal controls of the merchandising businesses?

3. How does the management detect fraud in merchandising industry?

Research objectives

The study was guided by the following specific objectives:

1. To assess the management’s internal controls in preventing employee fraud of merchandising businesses in Lipa City, Batangas.

2. To identify significant differences in the assessment of the manager’s internal control for the prevention of employees fraud.

These five associations are the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), Financial Executives International (FEI), The Institute of Internal Auditors (IIA), and the National Association of Accountants (now the Institute of Management Accountants [IMA]). The organization is dedicated to improve organizational performance and governance through effective internal control, enterprise risk management, and fraud deterrence.

The organization developed a framework that serves a guide to provide common understanding of internal control among all parties and to assist management to exercise better control over an enterprise. COSO’s Internal Control – Integrated Framework helps management better control the organization and to provide a board of directors with an added ability to oversee internal control.

According to Committee of Sponsoring Organization, there are five elements of an organization’s internal control framework. These are control environment, risk assessment, control activities, information and communication and monitoring

There is no significant difference in the assessment of the internal control in the prevention of employee fraud under the five components of COSO’s internal control.

H1. There is significant difference in the assessment of the internal control in the prevention of employee fraud under five components of COSO’s internal control.

Significance of the Study This study will be a significant work in studying fraud prevention in different industries in Lipa City, Batangas. This study will also be beneficial to the students specifically the researchers for the knowledge they will obtain throughout the study. Moreover, it will serve as an accomplishment for the requirement of ACCTHES1. In addition, businesses most especially in the merchandising industry will benefit in this study for the awareness they will acquire about fraud and its prevention. By understanding the needs of the business in terms of the knowledge in internal control, it will give them competitive edge towards its competitors. Lastly, this study will open the idea of studying fraud and therefor will benefit future researchers to have their subject for their forthcoming study. The researchers will provide recommendations that will serve as a guide for them to do further study about