Internal controls are processes and procedures put in place to meet a number of objectives:
Ensure the integrity of financial and accounting information
Meet operational and profitability targets
Safeguard assets
An organization’s internal control system is unique, specialized to address the specific risks the organization faces
Some key methods have become standard management practices common in most organizations
Qs: What is the first internal control that comes to mind? Who performs it, how frequently?
Internal controls serve many purposes, but have three very important reasons for existence
- Accurate financial reporting
-Required for legal and regulatory compliance
-Information used by management to make decisions – this must be accurate to be effective
- Protection of assets
- Efficient and effective organizational practices
-Ensuring employees throughout the organization are following processes and procedures