Essay about Internal Controls

Submitted By Beenlouis
Words: 1242
Pages: 5
Open Document
We would think it utterly ridiculous if there are an organization or group of people who set out upon a project and aimed to fail. In fact most groups of people set out to succeed in what they do. That said, we are also aware that only a few actually reach their goals of success. The question at the end of the day is, what sets these groups apart? What allows them to thrive and grow? And what are the means by which resources are allocated, measured and monitored? These systems that are in play and make all of the difference are often referred to as “Internal Controls.” For this paper I will be defining exactly what internal controls are, explaining their purpose and then looking at personal experiences in which internal controls were utilized effectively and when they were improperly implemented.
Internal controls are established systems or procedures created to help attain the objectives of an organization's mission. Effective internal controls assure the implementation of policies, avoidance of fraud and most of all the promotion of efficiency (University of Washington Finance & Facilities). Most internal controls can be classified into two groups: Detective and Preventative. Detective controls flag questionable incidents after the fact. One of the most obvious examples of detective control systems is the accounting practice of reconciliation in which one goes back to look at a previous time period in order to detect errors. The second group, Preventive controls, goal is to deter those unwanted incidents from occurring in the first place. This is often done through documentation, communication and authority flows (University of Washington Finance & Facilities).
It is commonly accepted that the measures an organization puts in place are vital to protect one's financial and management data. Several common purposes of establishing internal controls for a organizations exists; each with a control measure and goal. By establishing protocols and procedures that staff, or consultants, must follow, organizations can create a more efficient work environment. These established protocols often help to bring order and cohesiveness to organizations; this is because everyone knows what is expected as it is clearly outlined in the internal controls. Internal controls such as employee training can help organizations reduce errors. By training employees on an organization's specific process or procedures, then updating them when new ones are implemented, employees would be less likely to make mistakes.
Organization is an important part of most Internal controls. Properly organized data can increase an organization's productivity by allowing people to better prepare when documents are needed for a new job or if informations is needed in a review or audit. These internal controls might include giving employees separate logins to access information and data, or creating a system for filing client data and financial documents. The organization internal control applies to both online or offline information.
Unfortunately, fraud and theft is all to prevalent in organizations. By establishing internal controls, organizations can help prevent or reduce fraud and theft. These internal controls often include, but are not limited to, activities such as internal auditing, regular reviews and reconciling bank statements. Each of these can uncover whether an organizations money and resources are being misappropriated. The separation of duties can be a type of internal control. The clear separation of duties not only can assist with efficiency but can be a method of ensuring that there's a system of “checks and balances.” For example, an organizations internal controls might separate the task of managing accounts receivable and accounts payable between two people in order to reduce the possibility of fraud and theft. These types of internal controls, or checks and balances, can be ones created specifically by the government. One such example
Show More

Related Documents: Essay about Internal Controls

Essay on Internal Control

Internal Controls xxxxxxxxxx xxxxxxxxxx xxxxxxxx xxxxxxxxxxxx Internal Control Internal control is the process by which management structures an organization to provide assurance that an entity operates effectively and efficiently, has a reliable financial reporting system and complies with applicable laws and regulations. Internal controls primary goals are used to protect assets and improve the accuracy of accounting records. Protecting the assets includes measures to avoid employee theft…

Words 660 - Pages 3

Essay on Internal Control

CASH CONTROL GUIDELINES General The term “cash” includes currency, coin, checks, money order, credit/debit cards, ACH online payments and electronic file transfers. All departments receiving any form of cash, including cash receipts, change funds and petty cash funds must be authorized by the Director of Student Accounts. This authorization is established through a Memorandum of Understanding that outlines the responsibilities of the cash site and assigns accountability to an i…

Words 1214 - Pages 5

Types Of Internal Control

INTERNAL CONTROLS The backbone of the business When there is a business setting and people have to rely on others to help their business grow and develop, there will always be issues. One of the biggest issues when hiring employees to help grow your business is deciding who to trust to handle the financial aspects of the business. The business should establish some type of internal controls to aide in managing the assets of the company. What are internal…

Words 768 - Pages 4

Essay on Internal Controls

INTERNAL CONTROLS 1. Internal Controls Audrey Banks University of Phoenix Audrey Banks is a student at University of Phoenix if there are any questions or concerns about this essay you may contact her at audrey32685@email.phoenix.edu INTERNAL CONTROLS 2. Abstract In this essay you will find an introduction to internal controls. What internal controls are and how internal control…

Words 1040 - Pages 5

Essay On Internal Controls

Internal Controls XACC/280 4/21/2013 There are many rules companies must follow whenever documenting financial information or any other data which is gather during any business transactions. In order for said companies to report financial information internal controls have to be put in place as companies have to adhere to certain laws and regulations. Internal controls can be defined as a process which companies follow in order to ensure all financial reporting is done in a reliable and…

Words 984 - Pages 4

internal control Essay

Internal control is the process designed to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and unauthorized use, acquisition, or disposal. Internal controls also control: Segregation of duties, Proper authorization, adequate documents and records, Physical control over assets, Independent checks on performance. The third party (Auditors) will be hired to testify the internal control every…

Words 785 - Pages 4

Internal Control Essay

Accounting 310 Professor Yavari Internal Control The Children's Place Retail Stores is a leading specialty retailer of children's merchandise, ages newborn to 10 years old. The company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" brand name. As of February 1, 2011, the Company owned and operated 995 The Children's Place stores in North America and its online store, www.childrensplace.com. As a growing specialty…

Words 1290 - Pages 6

Case Study Of Internal Controls

audit of their internal audit controls. They want to know what they are doing correctly and how that helps their internal controls. They also want to know what they are doing incorrectly or poorly, how to improve it and how that will improve their internal controls. Internal controls are important for a company to be successful and mandatory for a company to go public. Brief LBJ is a small, growing company. It has room to improve on its internal controls. There are certain controls they need to start…

Words 788 - Pages 4

Internal Control FOR POSTING Essay

INTERNAL CONTROLS Internal Controls: Increasing Responsibility within Organizations Corporations struggle with the difficulty of tracking every transaction and every dollar, and it becomes much more difficult when there are millions of dollar being distributed and collected over any given time. This is when a company must have strong internal controls to account for where these transactions have taken place and that they are accurate. Internal Controls is an accounting procedure or…

Words 908 - Pages 4

Internal Control and Ljb Essay

Industries Internal Control Consultation Analysis 00Heuristic Industries Internal Control Consultation Analysis 908051510030LJB Company 00LJB Company 908052395855www.LJBCO.com 00www.LJBCO.com 81280214630Internal Controls 00Internal Controls Table of Contents I.Introduction II.Assessment of Current Practice and Requirements III.Recommendation for Improvement of Current Practice IV.Summary Section A - Introduction This consultation sheds light on the assessment of current internal control…

Words 741 - Pages 3