Written assignment Unit 4: Walmart’s Internal Controls Internal controls are crucial and essential to the progress of businesses. They act as preventive and detective measures of any activity damaging or threatening companies operations. According to Rossin (2019), small businesses are frequently victims of fraud because of the weak internal controls they implement. In 2018, the association of Certified Fraud Examiners (ACFE) reported that small businesses, with fewer than 100 employees, account for 28% of fraud instances - the highest rate (As cited in Rossin, 2019). Therefore, the need for effective and efficient controls persist in any business to ensure a smooth flow of business operations. In this week's written assignment, I will reflect on Walmart's internal controls. I will also provide some suggestions for Walmart to improve its internal controls system. I am interested in working for Walmart. The company has established its name in the world as a retailing giant. When it comes to accounting and organizational internal controls procedures, Walmart is doing a decent job keeping its accounting records clean and fraud-free. In its audit committee charter, Walmart commits to conduct financial audits to ensure that the delivered financial statements are accurate and describe their operations in the most error-free way (Walmart, 2021). In its auditing process, Walmart also ensures the separation of duties. For instance, The auditing process in Walmart consists of three separate parties; internal auditors, external auditors, and the audit committee. Also, and because Walmart is a multinational retail giant, it maintains different privacy policies that guide its operations in distinct countries. Since Walmart is a retail business, it has to implement effective measures to track inventory. According to Greenspan (2019), Walmart Vendor-Managed Inventory Model helps track inventory and updates it whenever needed. The model consists of allowing suppliers to access the data on Walmart's current inventory levels and the rate at which certain goods are sold. Therefore, suppliers can make decisions about when to send additional goods to Walmart's inventory. Also, in its efforts to implement strict measures in managing inventory, Walmart has four inventory types. These inventories are Finished Goods, Transit, Buffer, and anticipation inventories. This classification allows Walmart to track inventory goods by type and identify the need for inventory replenishment fastly (Greenspan, 2019). Concerning the recording of sales and updating inventory figures synchronously, Walmart uses Walmart’s Retail Link®, a tool used to pull Point-Of-Sale data. The latter system helps Walmart record accurate sales information and update inventory so that suppliers can make the right decisions (Shichor, 2017). It also minimizes fraud and shrinkage of inventory as data is synchronously updated, and any theft attempt will be easily identified and tracked. Finally, the most significant internal controls within a retail store are checkout controls. In checkout, thefts from both customers and employees are probable. Therefore, Walmart uses AI-powered cameras to track any suspicious tentative. According to Peterson (2019), Walmart cameras can detect issues such as items moving past a checkout scanner without getting scanned and notify checkout attendants to intervene. The internal controls discussed in the previous paragraph are a small portion of the systems that Walmart implements to ensure that its operations respect rules and regulations. However, I think that I can suggest other internal controls. For instance, Walmart can design its stores to makes it impossible for customers to exit without checking out. Although using AI to detect theft attempts from both customers and cashiers is effective, adding another security layer will help manage sales and inventory. The shop design must also eliminate blind spots and allow an optimal and effective distribution of security agents. Concerning inventory management, Walmart must increase its inventory checks and implement AI systems in the entries and exits of its warehouses. Inventory shrinkage is likely to happen in transition points. Subsequently, efficient surveillance tools can help in reducing the frequency of thefts. Walmart must also improve its internal accounting controls. As discussed before, the auditing process of Walmart's accounting records seems efficient. Nevertheless, as e-commerce and new technological solutions are introduced in the market, Walmart must adapt its accounting methods to the current needs. In fact, and since Walmart is trying to expand its operations and compete with Amazon in the online shopping market, It must implement preventive fraud measures and strong internal accounting and organizational controls (Mullaney, 2019). Walmart engaged in fraudulent actions to hide its inadequate internal control systems in its subsidiaries in Brazil, China, India, and Mexico (Ryan, 2019). Walmart employed third-party intermediaries who paid foreign government officials to ignore Walmart's weak internal controls. However, this case ended with Walmart paying more than $144 million to settle the SEC's charges and approximately $138 million to resolve parallel criminal charges. In total, Walmart paid more than $238 for violating the Foreign Corrupt Practices Act (FCPA). What makes the case of Walmart more significant is that the DOJ and the SEC confirmed that Walmart personnel knew of compliance failures and improper payments to government officials. This example of fraud also shows the significance of implementing efficient internal controls to avoid the burden of hiding fraudulent actions afterward. To implement robust internal controls and reduce fraud, Walmart wants to enhance its internal controls in foreign subsidiaries instead of ignoring them. Regarding other procedures and measures, Walmart is trying to avoid fraud related to gift cards. Some of these measures include limiting the use of Walmart gift cards and warning customers of scams (Walmart, n.d.). Walmart, and after the FCPA case, plans to consider warnings about weak internal controls. Walmart received many early corruption warnings from the accounting auditors of their subsidiaries but chose to ignore them. Finally, Walmart continues to implement advanced technological solutions to ensure that inventory and sales are accurately reported and documented (Malong Technologies, 2020). In conclusion, I think that internal controls are crucial to every business. They facilitate both management of business operations and accountants' job. Weak internal controls will definitely lead to fraud that costs more than the implementation of strong internal controls.