Internal control system

The internal controlsystem presents a whole range of activities related to policies and procedures set up in a business with the purpose of ensuring the realization of business goals for the management. Auditors check the functioning of the internal controlsystem through various tasks.

Control activities include preventive, current, additional, detection, manual, physical, computer, and management controls. Control actions or procedures are performed in a business by employees with various levels of responsibility. The highest level of responsibility deals with the evaluation of business activity in relation to plans, future predictions or business competition, while executive management assesses business reports it is in charge of, and the executants of particular activities are responsible for a specific duty they have. The policies are made to serve as a basis for procedures which affect them. Policies can be expressed orally or in writing, and are effective only if they are used for a longer period of time and if they are well accepted.

The internal controlsystem includes internal accounting controls which are a basis to express information in financial reports. Internal accounting controls represent specific procedures which refer to the compatibility of records, the accuracy of posted entries and application of software, the compatibility of certain accounts and the general ledger, the correct approval of documents, the validity of various budgets, the correct separation of functions, physical accuracy, etc.

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