1. What standards of internal control were violated here?
In the case involving the New Hope/Solebury School District and American Corporate Supplies, several standards of internal control were violated. The first lapse involved the failure of the school district to separate operational responsibilities between several staff members as well as to separate operational and accounting functions. Mikesell suggests that sharing related duties between several competent people introduces a system of checks and balances and divides responsibilities for operational transactions from the maintenance of accounting records reducing the chances of miscalculations and fraud (2014, p. 212). It appears that in the New Hope/Solebury School District, business manager Kathryn Hock was the only one ordering supplies, signing checks, confirming the receipt of supplies (even though they were frequently undelivered), and then subsequently altering the computerized accounts. Another standard of internal control that was violated concerns the maintenance of controlled proofs and security. It does not appear that purchase orders were issued for any of the merchandise in this case. Ms. Hock was simply able to use checks…show more content… While internal controls are established ahead of time, audits occur after the fact. Internal controls are put into place as a preventative measure. Per Mikesell, “Internal controls represent the first line of defense against fraud” (2014, p. 212). Furthermore, government managers who institute internal controls, implement risk assessment procedures, require the segregation of duties, and emphasize accurate record keeping improve the effectiveness and efficiency of their offices (Urbanik, 2016, p. 21). Ensuring the proper controls are in place guarantees that policies and procedures are followed and an organization’s assets remain
