Internal controls at Dowty Auto : an evaluation

Abstract

This study evaluates the fundamental internal controls prevailing at Dowty Auto. The objective of this dissertation is to establish the strengths and weaknesses of the principal internal controls currently applied. Special attention is given to the following areas: Purchases, Stocks, Sales, Wages and Salaries and Fixed Assets.

The research carried out was extended over a period of seven months and it involved collecting information on the present internal control system at Dowty by means of semi-structured interviews with one of the Sales Manager, with the Financial Controller and with the Commercial Analysts respectively. Information was also acquired through the questionnaires answered by the departmental managers.

The study revealed that Dowty enjoys a sound internal control system. However, in all the areas studied, the possibility of fraudulent or erroneous irregularities is not eliminated. This is because of the inherent limitations found in any internal control system. The constant review and improvement of the internal control system is essential in the smooth running of Dowty, therefore after internal controls are put in place, their effectiveness needs to be periodically monitored to ensure that controls continue to be adequate and continue to function properly. Management must also monitor previously identified problems to ensure that they are corrected and justified by the system of internal control in use.