Grade 11: Internal Controls and Reconciliations

Flashcards covering key vocabulary and definitions related to Internal Controls and Reconciliations in Grade 11 Accounting.

Internal Controls

Policies and procedures developed to safeguard business assets and achieve goals by preventing losses.

Purpose of Internal Controls

To ensure accurate financial information, adherence to policies, respect for norms and values, asset protection, and effective resource utilization.

Preventative Controls

Implemented procedures to prevent undesired events from occurring, e.g., preparation of budgets.

Detection Controls

Mechanisms to identify if an undesired event has occurred, e.g., creditors' reconciliation statements.

Corrective Controls

Mechanisms to correct problems, e.g., double blind data entry in accounting.

Directive Controls

Policies designed to direct and prevent unwanted occurrences.

Role of the Internal Auditor

An employee responsible for developing and implementing internal controls, but not issuing audit opinions.

Creditors Reconciliation

The process of ensuring the creditors list total matches the Creditors Control Account to identify errors or discrepancies.

Supplier Statement

A monthly statement received from creditors detailing transactions during the month, which must be reconciled with the creditors ledger.

Debtors Age Analysis

An internal control tool used to determine compliance with credit terms and identify debtors who are not meeting these terms.

Liquidity Ratios

Financial indicators related to the timing of cash flows from debtors and creditors, including Debtors Collection Period and Creditors Payment Period.