What Are Internal Controls?: Preventive Controls Are Designed To Discourage Errors or Irregularities From Occurring
What Are Internal Controls?: Preventive Controls Are Designed To Discourage Errors or Irregularities From Occurring
What Are Internal Controls?: Preventive Controls Are Designed To Discourage Errors or Irregularities From Occurring
Internal controls encompass the plan of organization and all of the coordinate methods
adopted within a business to safeguard its assets, check the accuracy and reliability of
its accounting data, promote operational efficiency and encourage adherence to
prescribed managerial policies. This definition recognizes that a system of internal
control extends beyond those matters which relate directly to the functions of the
accounting and financial departments.
Simply put, internal controls are anything we do to help us achieve our objectives. They
are the policies, procedures, practices and organizational structures implemented in
order to:
Myth Fact
Internal controls Internal controls are based on a strong control environment and solid busine
result from a strong practices that, in most cases, will be supported by policies; however, lack of
set of policies and policies does not preclude good business practices.
procedures (i.e., “If
a policy doesn’t
exist, we don’t
have to do it”).
Internal controls? Management and departmental personnel are the owners of internal controls
That’s why we
have internal
auditors.
Internal controls Internal controls are integral to every aspect of business.
are all about
finance and
accounting. We do
what the Office of
Financial Affairs or
the Department of
Finance tells us to
do.
Internal controls Internal controls make the right thing happen the first time.
are essentially
negative, like a list
of “thou shalt nots.”
Internal controls Internal controls should be built into, not onto, business processes.
are a necessary
evil. They take time
away from our core
activities and
responsibilities.
If controls are Internal controls provide reasonable, but not absolute, assurance that the
strong enough, we organization’s objectives will be achieved.
can be sure that
errors and
irregularities will
always be
detected.