Simply Steam, Co. / Easy Clean, Co.

Control Environment Evaluation Form

Greatly Neither Greatly

Weakens Weakens Strengthe
Control nor ns Control
Strengthens
1 2 3 4 5 6 7

1. Commitment to Integrity and

Ethical Values
2. Commitment to Competence
3. BoD or Audit Committee
Participation
4. Management's Philosophy and
Operating Style
5. Organizational Structure
6. Assignment of Authority and
Responsibility
7. Human Resource Policies and
Practices

Simply Steam, Co. and Easy Clean, Co. cases are almost identical. Questions were the
same however the managements’ responses were different. In Easy Clean, the dialogue of the
management regarding the office manager or the business operations can be seen in a positive
light. On the other hand, Simply Steam dialogue was negatively phrased. Reading the exchange
will give you a bad impression of the office manager.

Overall, I rated Simply Steam and Easy Clean at 3.0/10 for the following reasons:

 The company lacks written mission, vision, goals and objectives.

 They are rapidly growing and the operation is heavily dependent on Phil and Doug
and Mr. Day.
 The Board of Directors are not independent of the management.
 Skills and experience are not required for hiring new employees.
 Job duties and responsibilities are not defined.
 High attrition rate. Employees come and go.
 There is no professional accountant in-charged in the accounting department.
 Control
Environment Factors that Strengthen Factor that Weaken
Component
 The owners of Simply Steam, Co. are
hands on with the business. Phil with
training the field employees and Doug,
with the help of Mr. Day, manages the  Attrition rate is high.
1. Commitment
office.  Sales people can negotiate special
to Integrity and
 The company’s continuous growth can pricing.
Ethical Values
be attributed to their outstanding
service delivery. Promotion was only
through word-of-mouth advertising.

 Cleaning employees seem to receive  Office employees are part-time

sufficient training and understand their workers.
2) Commitment responsibilities.  There are no clear office
to Competence  Most of the accounting department staff responsibilities assigned.
 are college students majoring in  Job duties and responsibilities are
accounting. not clearly outlined for the office
staff.
 There is a board of directors.  Board members are also responsible
 Phil and Doug have sufficient for the management and
3) BoD or Audit knowledge in the business and the supervision of Simply Steam.
Committee industry.  Regular meeting is held once a
Participation  Board of directors hold meetings when year.
necessary.

 The office manager is paid a salary

plus percentage of the total sales
each month.
 There is an open-door policy.  The staff mentioned that they have
 Employees are encouraged to express problems processing trade
4) Management's
their concerns. receivables.
Philosophy and
 Doug and Phil are the only people  Owners have no to little
Operating Style
authorized to sign checks. understanding of accounting.
 Lacks physical control over
important documents or computer
equipment.

 Owners run the daily business

operations.  The sales people can negotiate
 There is a clear outline of duties and special pricing.
5) Organizational responsibilities for the owners and the  Office manager receives commission
Structure office manager. from the sales.
 Office manager oversees the data
processing

6) Assignment of  Owners run the daily business

 The office manager developed the
Authority and operations.
computer system.
Responsibility  Manager approves all sales.
 There is no user manual.
  An exception report of special prices is  The office manager alters the
produced. system.
 Job duties and responsibilities are
not clearly outlined for the office
staff.
 Overlapping of duties.

 High attrition rate.

 New employees receive immediate
 No skills are needed when hired.
training.
7) Human  Job duties and responsibilities are
 New hires are teamed with more
Resource Policies not clearly outlined for the office
experienced worker.
and Practices staff.
 Owners are highly visible.
 Overlapping of duties.
EVALUATION OF INTERNAL CONTROL
ENVIRONMENT

Simply Steam, Co.

Easy Clean, Co.

Submitted to:

Mr. Kristoffer Jayson C. Lazaro, CPA

Submitted by:

Fernandez, Ruth Ann A.

BSA – 4

January 12, 2019