plan of organization and all the methods and measures used by a business to monitor assets, prevent fraud, minimize errors, verify the correctness and reliability of accounting data, promote operational efficiency, and ensure that established managerial policies are followed. Internal control extends to functions beyond the accounting and financial departments. Accounting controls encompass safeguarding assets and the accuracy of financial records. They are designed to give assurance that transactions are properly authorized and are recorded to allow for financial statement preparation in accordance with gaap. Further, accounting controls deal with maintaining accountability for assets, proper authorization to access assets, and periodic reconciliations between recorded assets on the books and the physical assets that exist. Administrative or managerial controls deal with operational efficiency, adherence to managerial policies, and management’s authorization of transactions. Examples are quality control and employee performance reports. Accounting and administrative controls are not mutually exclusive since some procedures and records falling under accounting control may also be used for administrative control. An essential ingredient in maintaining internal control is the internal audit function. The CPA reports on the adequacy of existing controls within the entity. The external auditor must carefully evaluate the internal control system as a basis to determine the degree of audit procedures necessary in the circumstances.
accounting method, procedure, or system designed to promote efficiency, assure the implementation of policy, safeguard assets, discover and avoid fraud or error, etc.
method, procedure, or system designed to promote efficiency, assure the implementation of policy, and safeguard assets.