Posted: September 24th, 2022

Operations objectives pertain to smooth and effective business operations, including safeguarding assets and attaining the business’s financial goals.

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I’m going to design an internal control system for an e-commerce company. Electronic commerce is a type of company that provides a platform for other companies and individuals to buy and sell commodities over the internet (Radcliffe, 2019). In addition, customers can check and compare prices of different items offered by various companies and visit their physical stores to make the purchase.
The objectives and elements of the internal control system for e-commerce
The main objectives for the internal control system are to help the e-commerce function efficiently in their business operations, reporting, and compliance (Muda, I., Kholis, A., Pandia, S., & Tarigan, Z. (2018). Operations objectives pertain to smooth and effective business operations, including safeguarding assets and attaining the business’s financial goals. Report objectives involve accurate reporting of financial and non-financial data to help determine the company’s financial conditions. Compliance objective pertains to following rules and regulations set by the federal government.
To ensure that the control system is effective and efficient, I would use the following elements.
Control environment: I would interview the management and other staff to determine their attitude towards the internal control system and check previous auditing reports to determine if obvious errors are present.
Risk assessment: I would carry out a risk assessment to determine which areas of the business are most vulnerable to internal and external risks
Control activities: once I have identified the potential risks and areas of interest, I would put procedures to mitigate the risks.
Monitoring activities: I would keep an eye on the control system through internal auditing and functionality testing.
Information and communication: I would pass the information and reports related to the control system to all involved in the business activities.
Risks associated with e-commerce
E-commerce is exposed to compliance, fraud, and control risks (Wopperer, W. (2002). The compliance risk can be dealt with by ensuring that the management and staff know and understand the federal and state rules and laws under which the company works and ensuring that they follow them. By dealing with compliance risk, the company will achieve the compliance objective and avoid conflict with the government and other entities, damaging the company’s reputation.
Fraud risks will be prevented by ensuring that each employee’s duties are separated, and there is an oversight for each one, and implementing a comprehensive risk management control that will detect frauds as they happen, this includes constant monitoring of CCTV cameras and activities on companies’ computers (Adams, R. 2010). Dealing with fraud risks will help the company achieve the objective of safeguarding its assets and preventing losses.
Control risks will be dealt with by ensuring that the internal control is continually monitored and often checked for possible errors. By continuously monitoring the internal control systems, the management will detect any errors and loopholes early and fix them before causing much damage. This will help the company achieve its financial goals and make a profit.
Signs that the system is not working well
The system may not be working well if there is no accountability on the internal control environment. If the management and all personnel involved do not monitor the internal controls and ensure they meet the board’s intent, the internal control system is ineffective.
References
Adams, R. (2010). Prevent, protect, pursue–a paradigm for preventing fraud. Computer Fraud & Security, 2010(7), 5-11.
Muda, I., Kholis, A., Pandia, S., & Tarigan, Z. (2018). E-Commerce Internal Control Of Accounting Information Systems. In Proceedings of the 1st International Conference on Finance Economics and Business, ICOFEB 2018. European Alliance for Innovation (EAI).
Radcliffe, D. (2019). The Publisher’s Guide to eCommerce. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3502502
Wopperer, W. (2002). Fraud risks in E-commerce transactions. The Geneva papers on risk and insurance. Issues and Practice, 27(3), 383-394.

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