Internal Controls

internal controls objective

1. Safeguard assets

2. Enhance the accuracy and reliability of accounting records

internal control definition

policies and procedures designed to provide reasonable assurance that a business will safeguard its assets and record its transactions properly in order to eliminate any material discrepancies

Establishment of responsibility

one person is responsible for a task

segregation of duties

the work of one employee provides a reliable basis for evaluating the work of other employees

documentation procedures

documents should provide evidence that transactions and events have occured

physical, mechanical, and electronic controls

relate primarily to the safeguarding of assets and enhancing accuracy and reliability of the new accounting records

independent internal verification

the review, comparison, and reconciliation of information from two sources

other controls

bonding of employees who handle cash, rotating employee’s duties, and requiring employees to take vakations