Additional internal control principles shared with valid information supporting the need to implement those principles
Additional internal control principles shared with valid information supporting the need to implement those principles
Homework Answers
The main internal control principles are-
1. Segregation of duties
Segregation of duties is very essential as in the absence of this one person can take on many conflicting activities and is thus a fraud risk for example the person collecting cash should not be the one recording in the books of accounts. Otherwise if such person misappropriated cash it will be easy for him to conceal the same in the books of accounts
2. Assigning responsibility
This is very critical as each person should know what his or her role in the organisation is. The handover and takeover between functions should also be smooth to avoid any gaps. In the absence of clear responsibility assignment, the work may not get done and esch person will blame the other for the same.
3. Maintenance of records
Maintenance of proper records for each and every transaction is important to ensure that there are no transactions being missed out which could impact the company in the form of liability not being recorded or revenue not recognized or collected. Non maintenance of records may also expose the company to taxation and other statutory implications
4. Rotation of duties
Duties must constantly be rotated to ensure that no one person is I'm charge of a process for too long which is a fraud ri. A person constantly in the same role for a long period of time can potentially put the company at risk by engaging in unauthorised activities due to relation with suppliers or customers or internal employees
5. Independent reviews
Audits should be performed from time to time to bring out any control weaknesses. Such gaps as highlighted through interint audit should be plugged within a reasonable time frame to avoid any serious repercussions
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Additional internal control principles shared with valid
information supporting the need to implement those principles
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