The Importance of Internal Control Programs

knowledgeable supremacy designs are important because they help managers and accountants organize and survive their businesses more effectively. Companies who fail to implement a prevail program often find themselves with a disorganized mess on their hands; often leading to financial troubles. For a control program to be developed effectively, administrators must design the scheme of the organization which let ins all of the methods and procedures preformed. This gives accounting controllers a better accord of how the organization functions, so that they are able develop a plan of transactions, safeguard of assets, and accuracy of financial records. Organizational leaders often refer to the checklist identified in the Importance of Internal statement Systems article found in this weeks website articles. A summarized checklist of these features include: 1. reliable personnel with clear responsibilities, 2. separation of duties, 3. proper authorization, 4. enough documents, and 5. cost benefit analysis. Without a sound, ethical control in place, a business may find itself in web site similar to the TYCO scam; where upon unauthorized loans and gifts were taken from the company by former chief executive Dennis Kozlowski for himself and other employees.

Effective Internal Control Techniques

There are several techniques that business use to ensure that their inwrought control system is dependable. One method is to provide management reports regarding the companys inner(a) controls within their annual report.



While this in not mandatory, it has twist best practice because it allows management to share with its shareholders current issues and concerns, which would differently be left unspoken. According to the 1999 edition of Accounting Trends and Techniques, nigh 58% of public companies included management reports in their 10K

Management reports typically discuss the following topics:

* Financial statement presentation.

* The purpose, nature and components of the companys internal controls.

* The role of internal...

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