Session 10

[Annie]

Marine Fisheries is an organisation which has ships and boats with fishermen who catch fishes and other marine wealth and other staff applies presevatives. There are yet others who can and tin them. There are fresh fish sold in local markets and canned ones in the international markets. The marketing team looks after the sales of these products. There are regional offices and international offices to function the trade.

REquired:

a) State the internal controls you would suggest for Marine Fisheries right from getting the fishes till they are supplied fresh or canned.

b) State the reasons why do uyou thing internal control and risk management are essentials of an organisation

[Annie]

Marine Fisheries is an organisation which has ships and boats with fishermen who catch fishes and other marine wealth and other staff applies presevatives. There are yet others who can and tin them. There are fresh fish sold in local markets and canned ones in the international markets. The marketing team looks after the sales of these products. There are regional offices and international offices to function the trade.

REquired:

a) State the internal controls you would suggest for Marine Fisheries right from getting the fishes till they are supplied fresh or canned.

b) State the reasons why do uyou thing internal control and risk management are essentials of an organisation

a) Internal controls are designed to achieve the main objectives of:
effective and efficeint operations
timely and accurate financial reporting and
compliance with all relevant laws and regulations

Marine Fisheries should have on every boat a supervisor with other fisher men who is responsible for taking a count of the fish caught and submit in the preservatory department with a gate pass where one copy of the pass would be retained by the supervisor. The preservatory department would recount and accept plus make a entry in their register. These would be then divided accordingly for fresh sale and tinning and canning and similar records would be made. The fresh sales would again be alloted to the retail shop in the local markets and a account for the sale would be taken and the one's that decay. The decayed fish would be taken back for extracting oil or making manures. The canning and tinning department process would be supervised by a manager who would report to the marketing or sales departmnet and the management. The cans and tins would be dispatched to various outlets and track of sales would be kept. The cash and cheques would be received by the accounts department, who would be receiving a copy of the bills raised and thus can have a follow up for the pending payments.

b) Internal control as mentioned above enable
effective and efficient operations
timely and accurate financial reporting and
compliance with all relevant laws and regulations

Risk managemnet assits in identifying and assessing all the risks to the organisation in its daily operations.
It also identifies the remedies to such risks which helps the organisation to overcome the risks.

internal control and risk management are inter connected and there is strong bond between teh two. Every organisation to achieve their objectives for the long term have to design a internal control system. To design a internal control system the organisation first has to identify the risks the organisation would face, the areas of risk and what remedial action it should take. Risk management is the planning strategy of setting the internal control system and internal control system is actually the implementation part of risk management . They thus go hand in hand.

It is very important for the organisation to have an effective internal control system as it would benefit the organisation in various ways
quicky respond to business risks
safeguard both intangible and tangible assets
timely and accurate finacial reporting
compliance with all the laws and regulations relevant to the organisation

This is all what came to my mind.

Annie

[Vivienne]

I nternal controls are controls that management establishes in order to carry out business in an orderly and efficient manner.they also ensure that the accounting records are accurate as possible .
the types of intenal controls that could be found in marine fisheries are

1.segregation of duties
as can be seen there are some segregation of duties because
i)there are some fishermen who catch the fish.
ii)there are other staff who add the presavatives
iii)there are others who can and tin the fish
iv)marketing team looks after the fish sales locally
v)regional offices look after the fish sales internationally.

2.i would suggest that marine fish allocate responsibilities to people.every function should be in charge of a specified person.the reporting lines should be identified which means people should know who should reprot to who.

3 authorisation
all transactions like sales of these products should be approved by an appropriate person for example the marketing stsff should authorise the amount of fish to be sold locally in order to leave some for export

4.physical
this concerns the physical custody of assets and this means acces of these is limited to authorised persons only.for example the ships and boats should be under the custody of the fishermen and not the marketing staff!

arithmetic and accounting

this should be that there should be others who should check that transactions have been authorised and are correct(in sales and marketing department)

the internal controls can be remembered by the pneumonic SOAPMAPS


b)every business has risks that are inherent owing to the nature of business it does.it is important that these risks are identified by the external auditor before starting the work (isa 315)if these risks are identified then the external auditors will conduct detailed tests on those areas that are risky.
internal controls are essential to an organisation because management puts them in place so that its assets are secure as far as possible and ensures the completeness and accuracy of records.

inernal auditors have to ensure that the cotrols that management has put in place are being followed.it also regularly reviews these controls to see if they remain adequate.


NB i dont think i understood the b part i yet have to see the answers of others.

[Vivienne]

yes annie . i was so impressed with your answer i didnt think of all that but tell me do you work in the fish industry!

[Vivienne]

Acid where are you. i have been trying to send you messages but am getting a reply that you have exceeded the stored private messages quota.please clear your message box man. can i go aheard and post the session 11 questions.

[Acid]

Hi guys,

Apologies for being away and for full inbox . I had been busy atteneding some meetings and doing some imp. work. How was ur stocktaking?

yes go ahead with Session 11 questions!

[Vivienne]

yes guys,

i posted the stocktake report yesterday and i am expecting some comments on the various questions i raised.try to go through it and post whatever observations and comments please.

[Annie]

HI Vivi,

I do not work for a fish industry. But I liked your answer more specially the a part of it.


Annie

[sash_lar]

a) Internal Controls for Marine Fisheries
• Adequate means of notifying management of renewal of fishing local and international license.
• Proper maintenance policy for boats and ships for continuity
• Proper fishing gears for fishermen to prevent litigation
• Standardized measurement for fishes caught to allow for comparison
• Monitoring of the process:- Measurement of Fishes caught, and adherence to licenses.
• Proper transport and storage facilities
• Regular inspections of facilities to ensure health regulations are adhered to.
• Separation of duty:- Fishermen, person documenting weight of fishes, persons transporting fishes.
• Health guidelines for workers
• Fresh fishes entering factory should be documented
• Fishes used for canning should also be documented
• Controls in place for testing of canned fishes
• Quantity of canned fishes should be documented
• A schedule comparison of fishes caught, fresh fish sold, fishes entering the factory and canned should be done. Variation should be documented and investigated.


b) Internal control and risk management is essential to proper governance. It enables management to achieve it objectives.
Internal Control is a system that is put in place to prevent or detect errors or to alleviate the possibility of fraud. Internal controls are policies and procedures that should guide workers in conducting their duty. It includes approvals, authorizations of documents, security of assets, segregation of duties and operational performances.
Internal control should be created based on assessed risk. It aims to alleviate any thing that will threaten the perspective of achieving the organizations goals or maximizing profit.

Risk Assessment is an assessment of threats identified or threats that are possible base on the line of business.
An assessment of risk is vital to an organization as it allows management to implement strategies to alleviate the risk.
Risk assessment covers area such as:
Financial Risk
Operational Risk
Business Risk
These risks can be classified in various areas such as:
Control risk – insufficient control
Inherent risk – cause by external factors
Risk assessment will assist management in identifying the type of risk and the areas where the risk are so that corrective or contingency measures can be put in place.

[Annie]

Hi Sash,

good answer but I think you should elaborate more


Annie

[sash_lar]

Anne, I am not sure which section requires more elaboration. Please explain
:rolleyes:

[Annie]

Hi Sash,

on the b part of the answer. That is what I thought. May be Vandana who is marking our answers would be able to tell better.

Annie