Effects of Auditing in a Company? Essay

Introduction inwrought audit is an independent, objective assurance and consulting activity designed to add value and improve an organizations operations. Proper infixed govern non only ensures that the assets and records are safeguarded, just now also creates an environment in which capability and effectiveness are encouraged and monitored. This report is mainly focused on informal audit and internal control system in a company.In this case, the company is Kejora Bhd.. This report also focused on two main questions to be answered which is regarding on the evaluation of the strengths and flunkes of Kejora Bhd.s control environment. another(prenominal) question is regarding on the doers in Kejora Bhd.s control environment cook lead to and facilitate one of Kejora Bhd.s division which is the Fabricator shares general manager named decade. This case is all about Kejora Bhd.s rules of hold and its internal control system. There are basically quaternary rules of conduct whi ch is integrity, copency, objectivity and confidentiality to be joint with the Kejora case.What divisors in KejoraBhds control environment have lead to and facilitated offers manipulation of stock list?Based on the task, the factor that lead Adam to manipulate the take stock because he wants to repeal reduces of bonus and payment. Kejora Bhds procedure is to give salary depends on high performance of the staff. This lead Adam to manipulate the roll which is considered as fraud. Adam does not have competency knowledge to compete with the competitor and Adam not integrity in his job. Furthermore, the other factor that lead Adam to do fraud is Kejora Bhd does not have an internal audit to control the environment. It helps Adam to do the fraud without any assay as thither are no internal audit to appoint out the fraud. more(prenominal)ver, Kejora Bhd corporate interposition only occurred when planned result were not obtained. When Adam did fraud by showing constant or life-th reatening profitability, so there wont be corporate intervention occurred and it is a encouragement for Adam to manipulate the inventory. In addition to, Adam did fraud because he wants to get maintain performance to get compensator packages which sewer lead him to realize fraud by increasing the performances constantly. The other factor is it easy to control the inventory as the inventory section is weak. This is because the no proper internal audit to maintain it. It derriere be master when Adam manipulates the inventory to show a constant profitability and avoid the salary and bonus. Besides that, the employee is not following the compliance which is the code of conduct.Adam does not follow the law of audit. Moreover, Adam does not have the true and ethical value on his job. According to this, Adam attitude allow affects other employee in the firm. Furthermore, there is no take leaveicipation by the those charged with governance of the entity. The top management should al ways take a part in the entity. But in this case the board of directors and audit is not rattling mobile. When they are not concern about their management, Adam as one of higher position officer in the company make own decision which excess of his limit which consider as fraud. More than that, this entity does not have an organize structure to perform the stemma.In this case, this entity does not have a proper internal audit and the board directors is not very active. Besides that, all the staff in the entity should be answerable in their authority. In this case, certain staff does not play their government agency decent as Adam does not play his role properly and this lead him to do fraud. The human resources not only responsible to hiring employee but also have to provide a practice to train employee. Eventhough the entitys human resources have proper policies but Human Resources department entrust to monitor employee which weak in code of conduct. Adam whom responsibly do his work for 7 years and finally lead to fraud because of weakness of management which give encourage to fraud.ConclusionBased on the case, there are several things that has to be put into consideration. First of all, the management and internal control as well as internal audits must be compliance to laws, procedures and policy of the company. In this case, Mr. Adam cannot manipulate the inventories as it is very unethical to his profession. Although the rationality of him doing that is because he is afraid that his salary and bonus forget be reduced, he still must be compliance to the rules of conduct when doing his job. Here, we can see that the internal control is not very noticeable because the employees such as Mr. Adam are able to do things that can jeopardize the companys reputation by altering its business records. Second, Kejora Bhd. must hire an internal audit to examine all the financial statements all the time. The board of directors and the audit committee should a lso be active and provide full participation on the management of kejora Bhd.