Monopoly of the Postal Sevice
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- Category: Politics: Economics
- Date Submitted: 11/30/2010 07:20 PM
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Limitations of the Internal Control System
Stevie Rogers
AIU
11/26/2010
Abstract
In this report we will discuss the limitation of the internal control system and how it affects the operation ethics of a business. We will also explain the procedures of the internal control system and the objectives of each.
Limitation of the Internal Control System
Internal Control System is a process designed to provide a reasonable assurance regarding the reliability of financial reporting, compliance with applicable laws and regulations, and effectiveness and efficiency of operations.
The limitations of the internal control system are; costs of the internal control system should not exceed its benefits, and the design and operation should provide reasonable assurance that the entity’s objectives are achieved.
Inherent limitations include mistakes in applying internal control system procedures and policies.
Three examples of internal control procedures are, control environment, control activities, and information and communication. Control environment sets the tone of the organization and influences the employee’s perception of the importance of control. Control activities are the policies and procedures that help ensure that management directives are carried out (Internal Control Documentation, n. d.). The last procedure is information and communication which is an effective information system that provides for the identification and recording of all valid transactions, including sufficiently detailed descriptions of transactions to permit proper classification, proper measurement and proper financial statement presentation.
Symptoms of a lack of internal control is policy manuel missing a code of conduct, the policy manuel is missing policies and procedures that should describe the internal control activities that should be carried out, and the office manager deposits receivables and reconciles bank statements.
The impact that the missing journal...
Stevie Rogers
AIU
11/26/2010
Abstract
In this report we will discuss the limitation of the internal control system and how it affects the operation ethics of a business. We will also explain the procedures of the internal control system and the objectives of each.
Limitation of the Internal Control System
Internal Control System is a process designed to provide a reasonable assurance regarding the reliability of financial reporting, compliance with applicable laws and regulations, and effectiveness and efficiency of operations.
The limitations of the internal control system are; costs of the internal control system should not exceed its benefits, and the design and operation should provide reasonable assurance that the entity’s objectives are achieved.
Inherent limitations include mistakes in applying internal control system procedures and policies.
Three examples of internal control procedures are, control environment, control activities, and information and communication. Control environment sets the tone of the organization and influences the employee’s perception of the importance of control. Control activities are the policies and procedures that help ensure that management directives are carried out (Internal Control Documentation, n. d.). The last procedure is information and communication which is an effective information system that provides for the identification and recording of all valid transactions, including sufficiently detailed descriptions of transactions to permit proper classification, proper measurement and proper financial statement presentation.
Symptoms of a lack of internal control is policy manuel missing a code of conduct, the policy manuel is missing policies and procedures that should describe the internal control activities that should be carried out, and the office manager deposits receivables and reconciles bank statements.
The impact that the missing journal...