In this world, companies and businesses need a way of monitoring themselves, particularly in the accounting department. This is an act of preventative maintenance, ensuring that the financial reporting is reliable. Any successful business has a strong internal control model, without it, operations won’t run efficiently. A type of feedback, internal controls look at the quality and functionality of different aspects of a business ( eHow Money, n.d.). Its similar to the computer of an automobile, the computer receives feedback from all the different sensors and parts from the engine and the engine makes small adjustments to fuel and air ratio as well ...view middle of the document...
This is definitely the last thing a company wants to do, reporting any deficiencies is an admission of guilt, admitting there are discrepancies in the accounting department of your company. Any sane person would see this as possible fraudulent activity or just plain old poor financial reporting, either way this would most certainly result in a loss in business, investor pull out and a drop in stocks.
No one is ever perfect, if the user is a human being there will always be room for improvement and it can be easy to makes mistakes with distractions. Even with a perfectly running model, a company is only as good as its weakest link, everything has its limitations and the same goes for internal control. Internal control can only provide a certain amount of assurance; they can’t rely completely on internal control to protect assets. Internal control is designed to provide a reasonable amount of security regarding reliable financial reporting and preparation of financial statements. According to eHow Money ( n.d.), Internal control focuses on the actual policies and procedures, the quality of the data collected, the timeliness of response and the role played by the people involved in the company's internal controls ( Why use internal controls?, para. 1).
I believe staff carelessness or lack of knowledge would be one limitation to internal control, no matter how good the plan is if you can’t do it right then it won’t work. The other limitation is the more obvious one, personal gain. If you have an accountant who knows how to work the system they can steal a lot of money and no one may not find out for years.
In conclusion I believe internal control is an...