Explore BrainMass

types of internal controls

What types of internal controls are in place at organizations?

Solution Preview

Hi there,
<br>Here is some info that you will find to be helpful:
<br>More formally, internal control is broadly defined as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
<br>Effectiveness and efficiency of operations.
<br>Reliability of financial reporting.
<br>Compliance with applicable laws and regulations.
<br>Internal controls are tools that help managers be effective and efficient while avoiding serious problems such as overspending, operational failures, and violations of law. Internal controls are the structure, policies, and procedures put in place to provide reasonable assurance that management meets its objectives and fulfills its responsibilities.
<br>Management responsibilities for internal controls are met when
<br>Programs and functions achieve their intended results (effective).
<br>Resource use is consistent with the agency mission (efficient).
<br>Laws and regulations are followed (compliance).
<br>Accurate and timely information is prepared (reliable reporting).
<br>Effective internal control begins with written goals and objectives including:
<br>Operational objectives
<br>Financial reporting objectives
<br>Compliance objectives
<br>It is understood that the principals of effective internal control include the following:
<br>Internal controls benefit rather than encumber management. ...

Solution Summary

This question involves the fundamentals of internal controls