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discussion 4 - W hat is internal cont rol and what are the...

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What is internal control and what are the objectives of a good internal control structure in an organization? http://www.buzzle.com/articles/objectives-of-internal-control.html Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. The objectives of an internal control structure are to assist management in meeting objectives by providing reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition. The internal control structure also ensures that financial transactions are executed in accordance with management's authorization and are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The main objective of internal control is to set up an organizational structure where there are checks and balances among departments as part of business process management and they include: Reliability, Reliability is the main reason for setting up a structure of internal control. How do companies account for the possibility that some of their customers might not pay down the road? The companies will use two accounting methods for the bad debts. They are allowance method and the direct write-off method. Under the allowance method, companies estimate uncollectible accounts as a percentage of receivables. It emphasizes the cash realizable value of the accounts receivable. Under the direct write-off method, when a company determines receivables from a particular company to be uncollectible, it charges the loss to Bad Debts Expense.
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You are the Internal Audit Director. Your job is to develop the internal audit plan for the coming year. This year, you plan to focus on the internal controls within your organization. Prior to developing your audit plan, please describe the internal control components and control activities that you will consider when creating your audit plan. Discuss why each of these control activities is important and give an example of each control activity found in your organization.
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