ACCTG 101 Lecture Notes - Lecture 7: Bank Statement, Cash Flow, Current Asset
Document Summary
Monitoring refers to the assessment of the quality of an organisation"s internal control. In both ways, the purpose of monitoring is to continuously improve internal control. Internal control systems are limited in their effectiveness because of the human element and cost- benefit analysis. The human element refers to the fact that internal controls are often based on human judgement and action. Despite our best efforts, we all make mistakes a times and internal control cannot eliminate them all. Furthermore, employees can purposefully circumvent controls for personal gains. Cost-benefits analysis refers to the cost of implementing a control activity versus the benefit that the control provides. Most companies keep the majority of their cash in the bank. A bank reconciliation is the process of recognising and noting the differences between the cash balance on a bank statement and the cash balance in a company"s records. The purpose of a bank reconciliation is twofold.
