Justification For An Internal Control System

936 words - 4 pages

Internal Control Systems are very important for the risk management department of a company. This system helps keep the company protected from losing assets or incorrect use of assets. They also assist the company with keeping record and staying on track with objectives needed to be met. A controller’s duty would be to support management and the reporting of accounting and financial information. To start off, insurance and portfolios would complete the internal control system. Having a complete internal control system can further protect the company from risks.

The controller is or can be an employee who’s job title is mainly to be the backbone for management when dealing with accounting ...view middle of the document...

You would have to understand the company’s strengths and weaknesses. You must identify the options of the company in order to understand the company’s interactions. If a portfolio is created, the company’s risk can be analyzed by type and that will give a company stability between the risks and return.

There are some important things that help with the reduction of risk when running a business. Assurance is given to allow the company to feel that their mission and goals are being met. Their financial reporting is shown as reliable and their assets are protected against fraud. As mentioned above, the controls are created to protect the loss or misuse of assets for a company. Errors cannot be deleted but they can trigger alerts sent to management from internal controls. Every single internal control system needs to be properly documented and dished out all throughout the company.

The largest part of the control system is the control policies and procedures. This portion of the internal control system is present to confirm that transactions are correctly accredited. It’s also there to make sure there is a dissociation of tasks, the accounting records are correctly documented and well maintained, controlled access to those documents and company assets are accessible, and the data documented in accounting match the items that they are associated with. There must be a separation even though the company isn’t big. Meaning that the person who signs the checks should not carry the same duty as the person doing the bank statements or whoever receives things for or from collections should not make bank deposits.

As for most departments, management is responsible for the control system. This is because management helped to educate the employees on how vital the internal...

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