Kudler Fine Foods Risk and Internal Control Evaluation
Sonji A. Hart
ACC 542
December 8, 2012
Irene Branum

Kudler Fine Foods Risk and Internal Control Evaluation According to Hunton et al. (2004), the COSO report states the five objectives to an internal control system are (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Upon management’s review of the flowcharts submitted to Kudler Fine Foods from Learning Team B, were requested to provide information on internal controls that are required by the new system. This brief will identify and analyze the risks in the systems, design internal controls and evaluate the application of internal controls to mitigate risks and discuss other outside controls that may be necessary.
Identifying Risks and Internal Controls – Flowcharts It is important that businesses be aware that risks can arise internally as well as externally. Risk assessment helps a business to “identify organizational risks, analyze their potential in terms of costs and likelihood of occurrence, and install those controls whose projected benefits outweigh their costs” (Hunton, Bryant, Bagranoff, 2004, pg. 243). Learning Team B created a system customized to meet the needs of Kudler Fine Foods. There are however, potential audit and security risks associated with payroll, accounts payable, accounts receivable, and inventory. A major concern with any business is fraud. According to Apollo Group (2011), there is one person who handles the monthly and daily bank reconciliations. Only one person handles bank deposits as well as reconciliations, establishing the opportunity for dishonesty. Another potential risk is the lack of security around the data and assets of the business. There currently are no procedures to protect customer or business information. Another