University of Phoenix
This paper will discuss the internal controls and how they work in business. I will shed some light on the organizations financial and business policies, process and procedures. The purpose of these internal controls is to protect the company’s resources against fraud, misappropriate funds and most important waste. A company can spend quite a bit of money that does not make the company any profit. This paper will examine all aspects if internal controls and their functions.
When we look at the world of internal controls, there are two main goals for internal controls in a company. First is to ensure the company’s assets/trade secrets are safe. That could mean robbery, theft, fraud and other unauthorized individuals walking away with the corporation 's possessions. The second primary of internal controls is to ensure the accounting/finance accounts are chronicled properly. This means that there are no account errors and receivables and payables are recorded appropriately. Everyone in a company theoretically has internal controls. Their responsibility varies from their day-to-day involvement. President of the company and senior executives laid the foundation for ethics, competence, integrity for a positive control environment. This is important because this sets the environment in the company. If the senior staff and management hold them selves to a high standard, that should trickle down to the entire company. Head of departments have responsibility for internal controls in their divisions that are given to managers. Managers are responsible for implementing procedures and internal controls at the lower level that are then dispersed to the employee. Every person in the organization is aware the of internal control procedures that coincide with their
References: http://www.nysscpa.org/cpajournal/2008/208/essentials/p42.htm http://www.investopedia.com/terms/s/sarbanesoxleyact.asp Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial accounting (6th ed.) Hoboken, NJ: Wiley. http://www.cafm.vt.edu/dbmg/internal_controls.php