Internal Controls

(problems of the industry say the overheads of the industry are 70 dollars, is it worthwhile if it is looked at and possible of government authorities becoming involved. Internal controls system is only as good as the administration support behind the system; this includes training employees and actively observing the controls.

Internal controls can be prevail over or defeated. Internal control system should be designed to detect and prevent fraud, but it can only provide tolerable assurance that the financial statements are free from material misstatements. As we know, developing internal control is very expensive and time consuming, internal control has some limitation for instance there is complication of some. If the internal control of any industry is inelastic then it will create many problems of the industry say the overheads of the industry are 70 dollars, is it worthwhile if it is looked at and possible of government authorities becoming involved. Internal controls system is only as good as the administration support behind the system; this includes training employees and actively observing the controls.

How can internal control procedures are implemented. Each control should be evaluated based on a risk and a cost/benefit analysis. Examples of controls that prepaid adjustments were made to compile a check-list of recurring monthly journal entries, part of the financial statement review process. Dividing the responsibilities for each department you can reduce the chance of fraud and will soon raise the accounting accuracy levels. For example the inventory of the sales company should be kept by an accountant instead other the sales staff in case of a sales person stealing the record. Lastly, would be at each financial statement date, all variances within a tolerance should be investigated and explained by managers on the flux analysis date.

A lack of internal control symptom is lack of staff authorization and improper document