Internal control on sales Registration of sales orders: Sales orders shall be registered so as to accurately and productively process sales

orders to ensure that the company gets paid for every sale. It will also ensure that all sales orders are legitimate and to minimize the threat from missed revenue due to poor inventory control. Checks on delivery of products: This is to fulfill customer orders accurately and productively, and protect the inventory against loss and theft. On a rotational basis, different people will be assigned to verify the correctness of deliveries in respect of items, quantity and destination while checking deliveries against sales orders. Checks on Billing: This will ensure that customers are billed for all sales, invoices are correct and that the ledger is correct. This will prevent the failure to bill the customer. By this delivery and billing would be handled by two different peoples. Sales orders, delivery notes and invoices would be numbered sequentially in order to be able to see if any orders or deliveries may not have been invoiced. A sales order or delivery note that cannot be matched against a bill relating to an order or a delivery note has not been billed. Prevention of Error on the invoice: An approved price list shall form a basis for the invoice. We shall compare the delivery note against the sale order to check that no unordered goods are invoiced. Verification of Payments: So as to obtain customers' payments and prevent the theft of cash, there shall be a segregation of duties regarding the recording of cash and those who have access to the money. The company shall minimize its dealing with cash. Internal Control on Cash Separation of duties: One of the most important steps to protect cash and the company is to separate cash handling duties among different people. With proper separation of duties, no single person has control over the entire cash process. We shall have different people: Receive and deposit cash, Record cash payments to receivable records, Reconcile cash receipts to deposits and the general ledger, Bill for goods and services, follow up on collection of returned checks, Distribute payroll or other checks. While separating duties, we shall also try to minimize the number of people who actually handle cash before it's deposited. Accountability, authorization, and approval: Cash accountability ensures that cash is accounted for, properly documented and secured, and traceable to specific cash handlers. At every point in time the company will know: Who has access to cash, why they have access to cash, where cash is at all times, what has occurred from the transaction's beginning to end. It will achieve this through proper delegation of duties and record keeping. Review and reconciliation: We shall perform monthly reconciliations of cash receipts and bank account statements to provide good checks and balances.

Internal Control on Purchases Separation of duties: To ensure proper separation of duties we shall assign related buying functions to different people. With proper segregation, no single person has complete control over all buying activities. Different people shall: approve purchases, receive ordered materials, approve invoices for payment, review and reconcile financial records and perform inventory counts. Review and reconciliation: During periodic reconciliation, we shall review supplier invoices for accuracy by comparing charges to purchase orders, verify that the goods and services purchased have been received and perform monthly reconciliations of operating ledgers to ensure accuracy and timeliness of expenses. Inventory Internal Controls The following shall be our internal controls for inventory: Fence and lock the store: The single most important inventory control is simply locking down the storehouse. This means that I will construct a fence around the firm, lock the gate, and only allow authorized personnel into the store. Organize the inventory: It may not seem like a control to simply organize the inventory in the warehouse, but if we cannot find an inventory, we shall be unable to control it. Thus, a fundamental basis for inventory internal control is to number all locations, identify each inventory item, and track these items by location. Count all incoming inventory: We shall count the inventory before it is recorded as received. This keeps away errors from being introduced into the inventory records. Tag all inventory: Every scrap of inventory in the warehouse would be identified with a tag, which states the part number, description, unit of measure, and quantity. Otherwise, inventory items are bound to be mis-identified. Segregate customer-owned inventory. If there are empty barrels on-site that customers own, the warehouse staff will likely count it as though it is owned by the company. So label such items as with the name of the owner when they arrive, and segregate them in a separate part of the storehouse. Standardize record keeping for inventory. When an item is picked from the shelf in the warehouse, for use either in the production area or for sale to customers, it shall be recorded at the single gate of the store before it is allowed to exit the store so also for entry. Conduct a periodic obsolete inventory review: The warehouse can eventually become choked with obsolete inventory that cannot be used, which requires high storage costs and also interferes with the components that are needed in production. Periodically, we shall comb through the inventory records to determine which items should be sold off or otherwise eliminated. Prevention of Theft of items in stock: Goods shall be stored in a secure room with limited physical access. All stock movements must be recorded. Items should only be released from storage at the presentation of an approved sales order and a picking slip. All stock transfers must be signed and the inventory be counted regularly. Warehouse staff must be held accountable for the storage.

Internal Accounting Controls Checklist: The following questions reflect common internal accounting controls related to paying bills. We shall use this list to review our own internal accounting controls and determine which areas require further action. y y y y y Are all disbursements, except those from petty cash, made by pre-numbered checks? Are voided checks preserved and filed after appropriate mutilation? Is there a written prohibition against drawing checks payable to Cash? Is there a written prohibition against signing checks in advance? Is a cash disbursement voucher prepared for each invoice or request for reimbursement that details the date of check, check number, payee, amount of check, description of expense account (and restricted fund) to be charged, authorization signature, and accompanying receipts? Are all expenditures approved in advance by authorized persons? Are signed checks mailed promptly? Does the check signer review the cash disbursement voucher for the proper approved authorization and supporting documentation of expenses? Are invoices marked Paid with the date and amount of the check? Are requests for reimbursement and other invoices checked for mathematical accuracy and reasonableness before approval? Is a cash disbursement journal prepared monthly that details the date of check, check number, payee, amount of check, and columnar description of expense account (and restricted fund) to be charged? Is check-signing authority vested in persons at appropriately high levels in the organization? Are the numbers of authorized signatures limited to the minimum practical number? Do larger checks require two signatures? Are bank statements and canceled checks received and reconciled by a person independent of the authorization and check signing function? Are unpaid invoices maintained in an unpaid invoice file? Is a list of unpaid invoices regularly prepared and periodically reviewed? Are invoices from unfamiliar or unusual vendors reviewed and approved for payment by authorized personnel who are independent of the invoice processing function? If the organization keeps an accounts payable register, are payments promptly recorded in the register to avoid double payment? If purchase orders are used, are all purchase transactions used with pre-numbered purchase orders? Are advance payments to vendors and/or employees recorded as receivables and controlled in a manner which assures that they will be offset against invoices or expense vouchers? Are employees required to submit expense reports for all travel related expenses on a timely basis?

y y y y y y

y y y y y y y y y y y

Internal Control on ATM Cards: Since we shall accept e-payments, the use of ATM cards is encouraged due to the convenience and enhancement of operational efficiency. We shall keep a record of all itemized transaction s receipts each time a card is used for payment. Company cards shall be in possession of a specified person who shall keep the card while the password shall be known to someone else. The person in possession of the password shall be responsible for e-payments and withdrawals while the card holder shall collect the card immediately after the transaction is complete. Both must be present at the ATM/POS terminal at the time of transaction. The card password holder shall be instructed never to reveal the password of the card to any other person and shall be advised to change the password regularly. By this, the company cardholders would not be permitted to use the cards for personal use and we shall encourage cardholders to report lost or stolen cards immediately.