Accounting Internal Controls

Abstract

The author of this paper discusses Internal Controls and how they pertain to a business, the benefits of these controls and the limitations that they have. She also explains how these Internal Controls can be implemented into a professional routine, as well as, the symptoms of a lack of Internal Controls and the problems associated with them. Some missing journal entries and the impact that this may have on your financial statements and your company.

Companies must have "Internal Controls" to maintain principles and limitations. These Internal controls are established to prevent fraud, employee theft and unauthorized use. Internal controls are in place to enhance and correct the accounting records, minimizing human errors and omissions by confirming the record keeping systems are up to par and that they meet the organizations requirements for financial reporting and information, by identifying any existing weaknesses and any potential weaknesses, as well as making improvements and its impact on the operation within the organization. SEC.gov,(2011)

And reviewing methods of operating costs for effectiveness, reliability and speed. All U.S. corporations are required to have an adequate system of internal controls implemented into their accounting process due to the fact of the Sarbanes-Oxley Act of 2002. If not the company will be subject to fines and face possible penalties and possible prison time. SEC.gov, (2011)

However, there are some limitations; errors and omissions; human errors in the daily accounting input, Employee carelessness, poor judgment or lack of training. These controls often fail when an unusual transaction is posted to the daily transactions. It is impersonal and does not know right from wrong in terms of numbers. It knows different patterns of numbers. None