Internal Control and Basic Control Measures

Flashcards covering the definition of internal control, internal business control measures, and internal accounting control measures.

What is the definition of internal control in a business context?

Internal control refers to control over the compliance with set rules and regulations, implemented to assure that set goals are achieved and to prevent fraud.

Why are control measures established in a normal society?

They are established to exercise orderliness, safety, and a measure of management of society, ensuring order and structure.

What is the primary purpose of creating and implementing internal business control measures?

To ensure that the goals of the business are achieved.

What are the goals of internal business control measures regarding employees?

To ensure that employees abide by the policy, guidelines, and rules of the business, and to ensure that all employees respect and honour the norms and values of the business.

What are the goals of internal business control measures regarding assets and resources?

To protect the assets of the business and to ensure that the resources of the business are used economically and effectively.

What two main purposes do internal accounting control measures serve?

They are implemented to ensure that bookkeeping is accurately and correctly done, and to protect the business against losses because of fraud and other white-collar crime.

What are the goals of internal accounting controls concerning income and expenses?

To ensure that all income earned is received and correctly recorded, and that expenses and payments are authorised and correctly recorded.

What are the goals of internal accounting controls regarding assets, liabilities, and errors?

To ensure all assets are properly protected and recorded in accounting records, all creditors and other liabilities are paid on time and correctly recorded, all accounting reports are $100\%$ correct and reliable, and any errors or irregularities in accounting records are detected.