Internal controls are processes and procedures put in place by any organization to ensure that its objectives are met. It consists of all the measures undertaken by the business in protecting its resources against waste; enhancing efficiency, reliability and accuracy in financial reports; compliance with the laid down regulations; and evaluation of performance at all levels.
Protection against inventory theft and loss in the studied case is realized in several ways. First, there is proper documentation of all the transactions that are carried out. An official receipt is used in every transaction. The second and the most reliable method employed to prevent the loss is the authorization of only one individual to handle the cash. All the orders and payments are made at the counter. No order can be processed before the payment for that order is made. Separation of duties also plays an important role in preventing the losses. Here, every individual is designed a specific task and everyone must be accountable and answerable for any action, omission or decision made, especially if it leads to misappropriations. The business also employs the direct control technique over assets as a means of preventing losses. It is the sole responsibility of the owner of the restaurant to do the stocking whenever there is a deficit. At the end of the day, there is a proper audit and reconciliation of the accounts.
The control procedures employed by this organization include separation of duties, authorizations, proper documentation of the transactions, and restricted access to assets. According to one of the employees, sound personnel policies are never used. The application of most of these control procedures is easily seen. The one evident most is the separation of duties. Here, every employee is assigned a specific task like, cooks only does the cooking, serving only done by those in the serving department and the cash handled by the individual at the counter. Other controls are not seen like documentation, other than the issuance of receipts.
According to one employee of this organization, the employer has no trust on his workers. The well being of the workers is also not considered. I suggest that the owner of this business should provide good working conditions for his workers and appreciate their efforts by motivations. Good customer relations should also be considered. Use of modern technology and equipment should be employed as the demand of the goods and services here sometimes go beyond the supply.
The stakeholders of this business include the general customers, the workers (employees) and the owner of the business (the employer). The moral (ethical) issues in the internal control of this organization include provision of free meals to the workers and offering of the transportation facilities to the employees during odd hours of the night. This however, does not bring the conclusion that the internal controls are ethical. They are still insulting as the trust cannot be developed between the employees, the employer and the customers.