What Is Internal Control

Every fundamental law has a need to control its psychical picture to risk that can be due to lead in internal security, acts of nature or accidents. These elements if not cautiously p eachiate can be a source of commodious going away and even bankruptcy for an organization. Controls argon directives and restraining influences everywhere the activities of a system, method of invoice system systems assist counselling in controlling operations because accounting internal controls ascertain that all transactions argon authorized, all transactions are recorded, access to assets is allowed only(prenominal) for authorized purposes and accounting records describe only real assets. (Shsu, 2008) Internal Control was rootage defined in 1949 and deals with both accounting controls and administrative controls. A key say-so in establishing internal control is logical argument on Auditing Standards No. 48.

This statement distinguishes between Administrative controls: includes, barely is not limited to, the device of organization and the procedures and records that are touch with the decision processes leading to managements authorization of transactions and Accounting controls: which comprises the plan of organization and the procedures and records that are concerned with the safeguarding of assets and reliability of financial records and thus are designed to provide reasonable assurance that: a. legal carry on are executed in accordance with managements general or specific authorization. b. Transactions are recorded as implore 1.to permit preparation of financial s tatements in conformity with in the main a! ccepted accounting principles or either other criteria applicable to such statements and 2.To maintain accountability for assets. c. Access to assets is permitted only in accordance with managements authorization. d. The recorded accountability for assets is compared with the existing asset at reasonable intervals and appropriate action is taken with respect to some(prenominal) differences. (Shsu, 2008). What is...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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