MAF 680

REPORT

The problem faces by the Delima Enterprise Sdn. Bhd can be solve if the
company implement some sort of internal control system in all activities. A system
of internal control consists of policies and procedures designed to provide
management with reasonable assurance that the company achieves its objectives
and goals. Typically, there have three broad objectives in designing an effective
internal control system, reliability of financial reporting, efficiency and effectiveness
of operations and compliance with laws and regulations.

Standard Operating Procedure (SOP) is one of the internal control systems

that can be implemented by the company. A Standard Operating Procedure (SOP) is
a set of written instructions that document a routine or repetitive activity followed
by an organization. The development and use of SOPs are an integral part of a
successful quality system as it provides individuals with the information to perform
a job properly, and facilitates consistency in the quality and integrity of a product or
end-result. The term “SOP” may not always be appropriate and terms such as
protocols, instructions, worksheets, and laboratory operating procedures may also
be used.

SOPs will detail the regularly recurring work processes that are to be
conducted or followed within an organization. They document the way the activities
are to be performed in order to facilitate consistent conformance to technical and
quality system requirements and to support data quality. They may describe, for
example, fundamental programmatic actions and technical actions such as
analytical processes, and processes for maintaining, calibrating, and using
equipment. SOPs are intended to be specific to the organization or facility whose
activities are described and assist that organization to maintain their quality control
and quality assurance processes and ensure compliance with governmental
regulations. SOPs should be written and documented properly for easy use and
refer. If not, SOPs are of limited value. In addition, the best written SOPs also fail if
they are not followed. Therefore, the use of SOPs needs to be reviewed and re-
enforced by management, preferably the direct supervisor. Furthermore, the
written SOPs should be put in place that is easy to see mostly for individuals who
involve directly in the activities.

In preparing the SOPs, the company should have a procedure in place for
determining what procedures or processes need to be documented first. Those
SOPs should then be written by individuals knowledgeable with the activity and the
company’s internal structure. For example, in the case of Delima, Puan Balqis or
Encik Salam should be the suitable person for this task. The other way is, they can
also create a group or team for preparing SOPs.

By using SOPs, the Delima should be able to prevent the mistake as well as
errors in performing the operations. In terms of sales, for example, the employee
will know what to do from the time of receiving orders until producing the invoice
even if he or she do have any special skills in that area. Hence, SOPs should be
prepared in a simple way, so that, individuals with basic understanding can
understand.

Another internal control that can be implementing by Delima Enterprise is

Segregation of Duties. Segregation of duties is a concept of having more than one
person to complete the task. It is basically to have one person handle only one type
of task or power. Segregation of duties is critical to effective internal control
because it reduces the risk of mistakes and inappropriate actions. It helps fight
fraud by discouraging collusion. Example of segregation of duties such as the
person who requisitions the purchase of goods or services should not be the person
who approves the purchase. Regarding the Delima case, Puan Hashimah is
responsible for approval of employee’s timesheet as well as payment of salaries.
Supposedly, she only given the approval of the timesheet only, and the payment
should be done by other person such as human resource personnel.

So, when Delima implementing a proper internal control system as mention

above, its can prevents and avoid any major mistake happens. Because, SOPs for
example, it has given the instruction about the procedures to be done. Also, when
implementing the segregation of duties or powers it can prevent a person from able
to do frauds because the concept of one person with one task only.