Account Unit 1

Internal Assessment

To investigate if the Internal Control System affects the overall performance/ operation at
Sagicor Bank

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Table of Contents
 Acknowledgement

First and foremost I would like to thank God for giving me life and providing me with the
knowledge, strength, and the mindset to successfully carry out my Internal Assessment. I would
like to thank my teacher Ms. Ashley who assisted me for this assessment and helped me to
understand the topic and the assessment better. Lastly I would like to express my gratitude to my
parents for providing me with the necessary resources and tools needed for an successful Internal
Assessment (I.A)
 Aims and Objectives

Objective

To determine how well the Internal Control System affects the overall performance/ operation at
Sagicor Bank.

Aim

 To investigate if the internal control system is utilized correctly by Sagicor bank.

 To investigate how well the internal control system is effective at its task.
 To investigate the extent at which the internal control system contribute to the business
annual operations.
 Literature Review

One of the most notorious accounting scandals, occurred in 2015 and it had involved Toshiba
corporations. The investigators’ report said the consumer electronics and engineering giant had
overstated operating profits by a total of 151.8 billion yen ($1.22 billion) since 2008, claiming
numbers that were up to three times the actual level.

“Toshiba had a corporate culture in which management decisions could not be challenged,”
according to a summary of the investigator’s report. “Employees were pressured into
inappropriate accounting by postponing loss reports or moving certain costs into later years.”
The company is likely to have to restate its earnings for the last six financial years.

It’s the second biggest of its kind in the 21 century. In late 2011, executives at camera maker
Olympus were accused of orchestrating a $1.7 billion accounting fraud scheme.
It’s unclear so far whether any of its employees will face criminal charges, or whether the
company itself will have to face any official sanction. Reuters reported that regulators were
beginning their own review of Toshiba’s book-keeping.

Japan’s Finance Minister, Taro Aso, called the accounting irregularities “very regrettable” and a
blow to the country’s efforts to regain the confidence of global investors.
“If (Japan) fails to implement appropriate corporate governance, it could lose the market’s
trust.” Had the company utilized its internal control properly and effectively, implementing a
better access control systems, then this misrepresentation, falsifying reports would have made
known to stakeholders earlier, and the corruption would have been dealt privately rather than
publicly.

According to Investopedia Internal controls are methods put in place by a company to ensure the
integrity of financial and accounting information, meet operational and profitability targets, and
transmit management policies throughout the organization. Internal controls work best when they
are applied to multiple divisions and deal with the interactions between the various business
departments. No two systems of internal controls are identical, but many core philosophies
regarding financial integrity and accounting practices have become standard management
practices. Internal controls should be documented to create an audit trail. Management of an
entity is responsible for the establishment and maintenance of internal controls. For entities
required to have an audit, the accounting firm provides an opinion of the effectiveness of the
controls. The internal controls at Sagicor are strategically put in place to minimized or reduce the
threat similar to the Toshiba scandal, and to promote the efficiency of the company.