Internal controls are methods or procedures adopted in a business to:
-Assist in achieving the businesses' objectives
- Ensure financial information is correct and reliable
- Ensure cooperation with all operational and financial requirements
- Protect its Assets
They are essentially checks and balances within a business. It's objective is to reduce errors, limit financial losses and prevent fraud. They also segregate duties within the company and limit one persons control over an entire area. For example-
never have one person writing, receiving and reconciling your business accounts.
As the owner of Millennium Land Developers, it is your responsibility to ensure that the business has a good internal control system. As they flow through the entire business to:
- Help align objectives of the business:
To make sure everything is covered in the reporting procedures and the activities currently undertaken by the business are in line with the objectives of the business.
- Safeguard assets:
Makes sure the physical and monetary assets of the business are safe from theft, errors and fraud.
- Prevent and detect fraud and error:
Enabling the internal control system quickly identifies fraud and errors when they occur.
- Allow action to be taken against undesirable performance:
A method of dealing with dishonesty or fraud if detected
- Reduce exposure to risks:
Minimising the probability of any unexpected events happening
- Ensuring proper financial reporting:
Maintains complete and accurate financial reporting requirements by management and legislation and minimising lost time by fixing mistakes and ensuring resources are efficient and mistake free when allocated
That all the required information are included in the business reports. These include transactions and records.
Making sure that the right amounts are recorded into the correct accounts
Makes sure the correct level of authority deals with...