Business Administration 2257 Chapter Notes - Chapter 7: Internal Control, Cash Register, Bank Statement

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: J S

Document Summary

Internal control: a process designed to help an organization achieve reliable financial reporting, effective and efficient operations and compliance with relevant laws and regulations. Good internal control systems have the following components: control environment. Information and communication: the internal control system must capture and communicate all pertinent information to the appropriate internal and external users, monitoring. Internal control systems must be monitored periodically for their adequacy. To be effective, significant deficiencies must be communicated to those in authority (management/board of directions. A (cid:272)o(cid:373)pa(cid:374)y"s i(cid:374)te(cid:396)(cid:374)al (cid:272)o(cid:374)t(cid:396)ol (cid:272)a(cid:374) o(cid:374)ly p(cid:396)o(cid:448)ide (cid:396)easo(cid:374)a(cid:271)le assu(cid:396)a(cid:374)(cid:272)e that assets a(cid:396)e properly safeguarded and that accounting records are accurate and reliable. The size of the business dictates the limitations: small businesses have it hard to segregate duties, large business have it hard to monitor everything. A good system can become ineffective as a result of lack of training, employee fatigue, carelessness or indifference. Fo(cid:396)(cid:373)s the (cid:271)a(cid:272)k(cid:271)o(cid:374)e of a (cid:272)o(cid:373)pa(cid:374)y"s effo(cid:396)ts to add(cid:396)ess the (cid:396)isk that it fa(cid:272)es.