Theory On Control Of Assets Internal Contols What are internal controls Efficient, logical, effective and systematic methods that include checks, reviews put in place by a company to ensure the veracity of financial information, meet operational and profitability goals and broadcast management policies throughout the organization. Internal controls are how a business or organization’s resources are directed, calculated and observed. Purpose of internal controls Ensure a business: • adheres to its policies and plans (Establish Protocols) • departments achieves all its goals and targets Helps: • Promote systematic, inexpensive, proficient and effectual operations. • Produce quality products and services that agree with the department’s mission. • Safeguard resources against loss whether it comes due to waste, abuse, errors or fraud.
This includes the controls and systems of operating entities and the financial risks of a business. They inform directors and managers of any of the business’s weaknesses that are identified by the internal controls. The internal auditor provides the management of the business with analysis, appraisals, recommendations and information about the business as identified by the internal controls. Furthermore, they establish the maintenance of adequate internal controls over activities so these activities can be carried out efficiently and effectively. 4.
Within the corporations, the auditoris required to state clear opinion, if or not the annual accounts offer the truthful sight concerning the state of the corporate and its money position. To precise the opinion, the auditors shouldmeasure the register of the business, examine its assets and transactions. Altogether cases, the auditor ought to perform his job with due skilled care and high skil... ... middle of paper ... ...ortant for auditors to perform their duties in an effective way. In addition, the profession code of conduct for the auditors plays a significant role in improving the confidence for users of financial statements to ensure reliability of the financial statements. The business should have effective and adequate control system, to ensure the effective accomplishment of the strategy of the business and effective operations and to ensure conformity to laws and instructions, provide adequate financial reporting and to avoid any fraud and misbehavior.
Part 1: Theory on control of assets 1) Internal controls are methods that a company puts in place to ensure the integrity of financial reports and accounting information, and that they meet operational and profitability targets. They are implemented to assure the safe-guarding of assets as well as to detect fraud and any other errors. As such, they provide the company with reasonable assurance that specific objectives will be achieved. 2) The overall purpose of internal controls is to help a department achieve their goals by establishing protocols, preventing fraud and theft, separating duties, organizing information, reducing errors, protecting assets, making sure people adhere to policies and to ensure accurate accounting records are kept. It is what a department does or uses to see that the things they want to happen will happen…and the things they don’t want to happen won’t happen.
The first step or control procedure a company should undertake when developing a governance system is developing preventive controls to avert a possible compliance violation. Preventive controls include developing guidelines and responsibilities to conduct reviews of ethics policies, conflict-of-interest procedures, and updates in corporate compliance procedures that will protect and position the company to prevent a possible compliance violation. An associate of the company's preventative control measures include comparing the organization's current conflict-of-interest policy with industry regulations on a regular basis, reviewing recent government filings, and evaluating the company's current compliance program. If these control steps are proactively taken regularly in the organization, the company will have taken preventative steps to avoid a potential future compliance violation (Maltz, Nov/Dec 2003). The second step or control procedure a company should take to promote corporate compliance is a detective control.
Context and Background One of the foremost objectives of any business is profit maximization; each and every organization wants to run a profitable and sustainable business activity alongside satisfying the needs of its customers. It wants to set a mark, and be differentiated amongst its competitors whilst increasing its market share value. However in regards to the prospects of profit maximization, every business must ensure that it adheres to a strict code of conduct, enforce internal controls and abide by set rules and regulations. Corporate governance refers to such a system by which companies are controlled and governed by. It provides a core set of guidelines and principles towards compliance of regulations in the corporate environment with business being conducted in fairness and integrity (Thomson, L. 2009).
To be informed, taking the necessary steps to ensure management disclosures are accurate fair and complete. Companies must stay informed of new developments in corporate governance. And keep their employees a breasted as well. In addition have a ongoing monitoring program in place. Companies must take a proactive approach in setting standards and monitoring integrity to improve principles, values and growth.
Businesses today are required to follow set guidelines and regulations when it comes to keeping and reporting business transactions. The goal of these guidelines and regulations is to ensure the accuracy of a business accounting reports and to also make sure that company assets are not misappropriated or misused by its employees. Internal controls within a company fall under various categories; in this paper I will discuss the establishment of responsibility, physical, mechanical, and electronic controls, segregation of duties, and independent internal verification. In addition to internal controls I will also discuss acts of Congress that have paved the way for the current internal controls, and the limitations of internal controls. The first items that I will discuss are the different types of internal controls.
Report of my presentation I believe my audiences has already understood some about audit through our presentation. This report will show the power points of auditing in my presentation, as well as show the reasons of why I choose an internal auditor as my career. The next section is going to explain what internal audit and internal auditor is. Internal auditors ordinarily work in companies and organisations to monitor and estimate how well risks are being managed, the business is being governed and internal processes are working. The range and nature of audits can vary importantly but the main priority of the work is to make sure any issues that affect the survival and prosperity of the business are dealt with.
(Retrieved from http://www.allbusiness.com/glossaries/internal-control/4943791-1.html) Internal Controls must assist the accounting information system in reaching its objectives. It must not hinder the organization in any way. The concepts must be woven into the day-to-day responsibilities of managers and their staff and also into the AIS of the organization. BENEFITS OF INTERNAL CONTROL There are numerous benefits of having an effective Internal Control in place in an organization. Apart from making sure that the company does not lose money because of different types of theft or misappropriation of information, Internal Control helps to ensu... ... middle of paper ... ...endent employee.