Philippine E-Journals

Design of an Enhanced Internal Control System for a Multipurpose Cooperative of a Fire

Carwena O. Alvarez | Jennuel C. Belizon | Alea Kaye S. Resurreccion

Discipline: Accountancy

 

Abstract:

This study assessed, evaluated, and recommended enhancement on the design of the existing internal control system of the multipurpose cooperative of a fire training institute. The study utilized the descriptive research design using the evaluative developmental approach. Primary data were gathered through interview, observation, and internal control questionnaire. Respondents of the study were the cooperative’s board of directors, treasurer, secretary, revolving fund custodian, purchaser, storekeeper, selected customers, and other active members.

 

Findings revealed that the expenditure cycles, except on softdrinks, maintained a revolving fund used for regular operations. This revolving fund was being maintained by individuals who also performed recordkeeping. The authorization, recording, and custodial functions were assigned to only one person. On practices the business employed, the researchers discovered the following: 1. cash receipts were being added to the revolving fund; 2. the cooperative lacked appropriate records and documents for specific transactions; 3. the cooperative was using their cash in disbursement because they did not have a bank account; and 4. the cooperative was using the logbook as the basis in computing salaries.

 

The foregoing findings supported that the researchers’ proposed design of an enhanced internal control system for each line of business (commissioning, lending, and canteen) was indeed necessary for the cooperative to adopt. Hence,, the following recommendations were forwarded: for the cash disbursement and receipt procedure of the three lines of business (commissioning, lending, and canteen), the cooperative should open a bank account to properly control disbursements and collections; and for the records management of the cooperative, to monitor the documents to maintain proper recording and provide audit trail for all recorded transactions.