Jim’s business is booming, and within six months, he has gone from his first cluster of four condominiums to 30 condominium towers within the downtown core that are serviced by his cleaning staff. Jim hired his first supervisor, Vagney, this month and has spent the past week training her and thinking about changes he can now make to internal controls. Vagney has a schedule of cleaning and drops in unannounced while cleaning is being done to do quality control checks. She has been assigned the responsibility of purchasing cleaning supplies from local department stores when they are on sale as well as scanning for specials to help reduce cleaning supply costs.
Jim still does the accounting, including payroll for his six full-time employees, who are paid a base pay of 20 hours per week. Jim does the scheduling to make sure that each employee receives at least 20 hours of work per week, then schedules the remaining cleaning around those 20 hours, trying to minimize the number of trips that employees need to make.
However, with a thriving business doing, at minimum, 150 hours of cleaning per week in personal condominium units ranging in size from bachelor units to luxury three- bedroom units, Jim is feeling burned out. During the
Christmas lull, he decides to take some time off and reassess the direction that he is going. He also wants to make sure that he has key risks at his business addressed.
REQUIRED
a. Using the framework of COSO, describe each internal control category, and provide an example of controls that are present or could be present at CondoCleaners.com.
b. Identify three risks that could affect CondoCleaners.com. For each risk, provide a control that could be used to mitigate the risk.