The Case of Discount Department Stores and Fenwick Essay

The Case of Discount Department Stores and Fenwick - Essay Example In the field of accounts and finance, internal control systems are essential to ensure accountability and transparency. Through the use of internal control system, it is easy to detect and prevent fraud, and errors. From the case study, it can be noted that at Grapevine stores things used to be operated the way anyone felt could suit him. The following are the missing internal controls; control environment, control activities, monitoring activities, and risk management. According to, (Hightower, 2009), internal controls reinforce the flow of activities in accounting and ensure accountability and responsiveness is achieved. Mr. Fenwick will conduct an assessment on the internal control mechanism adopted by the Grapevine Store and offer recommendations to make it robust. The missing internal controls have been expounded in the discussion below. According to Steinhoff, (2001), a controlled environment builds a culture among the employees for them to operate within. Assessing Grapevine Stores this is not the case. It can be identified that the employees at that store used to perform financial and accounting processes based on their thought. It is in the interest of the Discount Department Stores to have uniformity in the reporting of financial status from individual stores. Grapevine conducted their processes differently from what is recommended. Mr. Fenwick noticed that three-quarters of money expected to go in their bank account was from credit cards and a quarter from currency and cheques. The act was contrary to the policies of Discount Department Stores which states that half of the money going to the bank account should be from currency and cheques, and the other half from credit cards. This can be the reason the store was closed. The store offered excess credit services to its client, who maybe defaulted the terms and failed to pay, resulting the store to record losses. The