Evaluation of the Internal Control System of

HPPDOTCOM to Minimize Risks and Improve

Cash Management System

Introduction Results

Framework Conclusion

Research Method Recommendation

INTRODUCTION
WHAT IS HPPDOTCOM?
HPPDOTCOM Computer and Gaming Station is a sole proprietor company which is a
branch operator of electronic gaming software like Gamezone which is accredited by
Philippine Amusement and Gaming Corporation (PAGCOR).
This study aims to evaluate and improve HPPDOTCOMs internal control system
specifically regarding cash to detect risks and to reduce such threats and risks to an
acceptably low level.
The emphasis would be on the evaluation on how the company manages its cash.
FRAMEWORK
PRACTICES THAT COULD HELP SOME
COMPANIES IMPROVE THEIR SET OF
INTERNAL CONTROLS:
1. Independent Verification.
Ensure the reliability of accounting information and the efficiency of
operations

2. Physical Control.
To protect the companys assets.

3. Proper Authorization.
Ensure that activities adhere to established guidelines.

4. Observation and Review.

Includes both indirect and direct techniques. Indirect techniques work
behind the scene to avoid disrupting daily accounting activities. Direct
techniques include personal interviews and process observations.
RESEARCH METHOD
The researchers used the qualitative case study research design wherein interview
with the branch manager and walk through procedures are conducted in the Marikina
Branch of HPPDOTCOM.
Objective?
To know the reason behind how and why asset misappropriation happens, and how to
improve its cash internal control for a better cash better cash flow and management.
How?
The researchers designed a six-page questionnaire which contained questions on the
different transaction cycles such as Cash Receipts, Disbursements, and Expenditure.
Also, it involves the different procedural controls such as Segregation of Duties,
Custody of Assets and Recording.
RESULTS
HPPDOTCOMS OPERATION?
HPPDOTCOM is open 24 hours, 7 days a week. There are three shifts to cover the
operation and each employee shift is 8 hours. There are 4-5 machines in the branch
which is online and other computers at Gamezone Program. Each player uses a
computer installed with games to play. Each computer is numbered.
RESULTS
Roles and Responsibilities:
Owner 1. Accounting - JDSJ Accounting Services records the cash
receipts, disbursements and prepare the VAT and other requirements
to be complied to the BIR, SEC and other regulatory agencies.
Accounting 2. Manager - Responsible for the overall operation in the branch.
Manager
Services
3. Cashier - responsible for the sales of the operator and the
custody of the cash register.
Cashier 4. Gaming Assistants - the front line for customer service
and serve as representatives of the operation.

Gaming Assistants 5. Facility Guards - Monitor and authorize entrance and

departure of employees, visitors, and other persons to guard against
theft and maintain security of premises.
Facility Guards
RESULTS
Internal Controls Presently Implemented:
Deposits
The receipts in the cash register are deposited every day to the bank account of Gamezone and if it has reached the bank cut-off, a collecting
officer from the Gamezone will collect the cash receipts of HPPDOTCOM.
Collection, Custody of Money and Preparation for Deposit
The collection and custody of money is performed by the cashier. While the deposit preparation functions and money awaiting for deposit is
the task of the manager.
Cash Receipts Recording
Accredited Game Software captures and records in a chronological manner all the transactions made by the cashier, loading of each computer
and its balances.
Disbursement
Disbursements like rent, utilities, and other expenses are authorized and paid by the owner.
RESULTS
Shortage
Shortage happens when the Gaming Assistant and the cashier loaded the wrong machine.
Entry-point of Theft
The software limits its function in recording all the transactions made by the cashier, loading of each computer and
its balance. It does not record the wins of the players and this is the entry point of the employees to rob the
company.
The theft in the company was made possible because of the connivance of all employees from the Manager to the
Gaming Assistant.
CONCLUSION
1. An evaluation of internal control has determined that theft occurs because of a
loophole in the policy of the business in substantiating the wins of the players and the
lack of verification if the winnings are coming from genuine players. And this results
to the declaration fallacious profit by the manager.
2. The lack of hands on supervision of the owner to the business has a significant
effect to the theft in HPPDOTCOM.
3. If the owner cannot take active part in the business despite of the irregularities, the
researchers therefore suggest that the company must add to its organization a
position whose role is to verify independently the amount of wins requested by and
delivered to the company. This suggestion is hoped by the researchers to reduce the
risk of irregularities of the company to an acceptable level.
4. The theft has a significant effect on the cash management, hindering its owner to a
view of expansion and improvement.
RECOMMENDATION
The company must:
A. Have an independent body standing in between the management and the
deliverer of the prizes.
B. Substantiate the amount of wins to be requested with documents that will be used
by the Internal Verifier to check if all the wins recorded are genuine wins from the
electronic game And that the person behind the winning form or documents is a
genuine player.
The total amount of money in the forms is considered to be the amount of money to
be requested by the Internal Verifier to the office of Gamezone. The Manager will
be notified by the Internal Verifier the schedule of the delivery and upon acceptance,
the independent verifier will check if the amount of money received is equal to the
amount the Independent Verifier requested.
END OF PRESENTATION
The Researchers:
Alcones, Marjorie T.
Catiis, Paul Jirah J.
Eduardo, Eugenio Jr. M.
Gajardo, Janelle C.
Perez, Anna Mae R.