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Internal Controls

Internal controlling, in accounting terms, refers to internal (within the company) analysis of all activity so that effective goals and objectives can be set for company performance.  All of the company's activities, whether it is financial or operational, is monitored, recorded and assessed in order to create the most beneficial goals.  This process is very important in accounting to ensure that the company is in good financial position to remain in operation and to detect fraudulent behaviour early on.  If the fraud is not detected early enough, it can lead to serious repercussions.  Internal controls within a business are referred to as operational controls, as they are attempting to control activity relating to revenue.   Controlling essentially produces budgets, objectives and plans for the company.  Qualified accountants are hired as employees (opposed to external auditing) to analyze the data and create these reports.

The Sarbanes-Oxley Act in 2002 required that companies in the United States improve current internal control processes in order to produce more specific reports.  The goal of this law was to protect the interests of potential investors and other entities that may require accurate and ethical financial statements.  

Categories within Internal Controls

Control Self-Assessment

Postings: 1

A technique used by a business to ensure that their risk-management and control processes are effective.

Internal Control and Audit Sampling

You have discussed with the president of Vista Corporation several material weaknesses in internal control that have come to your attention during your audit. At the conclusion of this discussion, the president states that he will personally take steps to remedy these problems and that there is no reason for you to bring these m

Internal Control and Fraud

What were some of the factors that contributed to the situation, and what internal controls could have been in-place to prevent this fraud from happening? SEE ATTACHMENT and briefly discuss. Case: Joe and Mary Gray started their multimillion-dollar home electronics and car audio store chain in Texas in the late 1970's.

Justification for an internal control system

Leadership confronts you, as a controller, and questions the need for an internal control system. Write a report in 700 words, justifying the need for the system when controls are in place with insurance and portfolio approaches. Explain why current approaches are valid but why an internal control system will be more benefi

Internal control amongst management

Internal control has gained increasing importance among management, external auditors, regulators, and others. Use a specific example that illustrates the answer. When considering the effectiveness of an internal control structure, what inherent limitations should be considered?

Which of the following internal control procedures would

Which of the following internal control procedures would prevent an employee from being paid an inappropriate hourly wage? a) having the supervisor of the data entry clerk verify that each employee's hours worked are correctly entered into the system b) using real-time posting of payroll so there can be no after-the-fact d

Internal control and Information Technology (IT)

For internal control to be effective, it needs to be enthusiastically accepted by the management. The other components will be ineffective if the management has a tendency to override these controls. From an auditor's perspective, having a good knowledge of such practices has a significant contribution to understanding the inter

Internal control

There are different internal control models. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) model is one that is widely accepted by companies in the United States. This model is discussed in Hunton, Bryant, and Bagranoff. Please review each component and share your thoughts with examples. "Pricing

Internal Control Principles Over Cash Disbursements

Please help me with the following question: Newell Company has the following internal control procedures over cash disbursements. Identify the internal control principle that is applicable to each procedure. (a) Company checks are prenumbered. (b) The bank statement is reconciled monthly by an internal auditor.


When a business finds itself vulnerable to fraud, it is usually due to lack of oversight and regularly scheduled meetings that would permit the reconciliation of accounts. It is often helpful for a business to have external audits conducted by outside services. The use of signature cards during any business withdrawal will permi

weaknesses in internal control

Based on the following summary, I am to write a letter to Jerry Mays, owner of the Manhattan Company, explaining the weaknesses in internal control and your recommendation for improving the system. As a new auditor for the CPA firm of Croix, Marais, and Kale, you have been assigned to review the internal controls over mail c

Fraud and Internal Control practice exercises

A. Yu Suzuki Company has a balance in its Accounts Receivable control account of $11,000 on January 1, 2012. The subsidiary ledger contains three accounts: Smith Company, balance $4,000; Green Company, balance $2,500; and Koyan Company. During January, the following receivable-related transactions occurred. B. Listed below

Control Environment

What is the control environment? How does the control environment affect a company's internal controls? What are the negative and positive elements of a control environment?

internal control concepts

Support your response from the e-text and/or course articles, do not use only web sites and avoid the unacceptable web sites. Use a specific example from your experience that illustrates the answer and demonstrates your understanding of course concepts. Responses should have both citation and reference. Internal control has

Controls for IT and Reporting: Internal control reporting options

Controls for IT and Reporting & Evaluation ? Imagine you are a company controller. ? Identify the internal control reporting options. ? Create criteria against which the options may be evaluated. ? Include internal controls for IT. ? Paper provides sufficient background on the topic and previews major points. ? Paper

Control System Conditions

1. What are several conditions that may lead to fraud? To what type of fraud may these conditions lead? 2. Explain some risks to the revenue and collection cycle that are the result of improper revenue collection. 3. Describe the source documents and controls that would be included in a typical production cycle.

Internal Control Weaknesses for Cash and Receivables

For each of the following independent situations, indicate the apparent internal control weaknesses and suggest alternative procedures to eliminate the weaknesses. 1. John Smith is the petty cash custodian. John approves all requests for payment out of the $200 fund, which is replenished at end of each month. At the end of

Evaluation of Internal Control Procedures

Would like some assistance writing an essay on internal control procedures. Internal Control Procedures - Accounting Assignment: Read the following case and explain one internal control procedure that would be helpful in this scenario. Alison Marsh was a trusted employee of Small City State Bank. She was involved in e

effective internal control system

To properly assess the internal controls in place at TPC, you have found that there are three major objectives that an entity should follow in designing an effective internal control system: reliability of financial reporting efficiency and effectiveness of operations compliance with laws and regulations Explain what e

Database system and effective internal control system

Discuss how database systems along with their characteristics (such as referential integrity -- but there are others) can help companies have an effective internal control system. Gives the three database characteristics and explains them. Describes what a database should be.

Internal Control Systems: Example Problem

The FCPA, COSO, and SOX, (just to name a few), covered corporate internal controls addressing different aspects. In addition IT has established their own internal controls that address the IT specifics and called 'COBIT'. Is it possible to have one internal control system that applies to all companies under the same industry?

Internal control weaknesses

Consider each of the following situations independently: a) The accounts receivable clerk opens the mail, records the cash receipts, posts the customer accounts, then forwards the cheques received to the cashier for safekeeping until they can be deposited by the assistant controller. b) All plant employees are required to

Internal Controls Related to Cash

What are some internal controls related to cash? Why is control over cash important? What are the pros and cons of segregation of duties over cash? Why is a bank reconciliation considered an internal control over cash? How does it provide control? What control violations might the bank reconciliation highlight?