July_6th_lecture - J uly 6th lecture 1 Internal Controls...

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July 6 th lecture 1. Internal Controls Putting together an organizational plan for the company to follow Things we are trying to accomplish is: prevent fraud ( has all of the assets including cash, inventory, etc. ) , be efficient ( saves you money ) , have reliable and accurate accounting records, encourage your employees to adhere to company policies ( could cause problems with everything else if employees do not adhere to policies ), and comply with regulatory requirements. If we follow things in this system everything will flow smoothly. Characteristics that allow for efficient internal controls: - Personnel: easiest way to prevent someone stealing money is not to keep cash around. Background check. Need to be able to do the job ( experienced and competent and knowledgeable ), reliable, and ethical. In company you need to set up training for your employees to make sure they are competent. To make an employee more reliable you pay them more to make them care more about the company. Provide supervision to employees. - Assign all responsibilities to ensure nothing falls through the cracks. - Make sure everything is properly authorized. And have a written set of rules. IN written set of rules cover what you do if you have to go around those rules. - Separation of duties. Keep possibility of fraud or theft down to a minimum. This helps ensure reliable accounting records. Ex. Keep accounting away from cash. Keep accounting away from inventory ( custody of assets away from person who accounts for assets ). Authorization to deposit cash separate from
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This note was uploaded on 08/31/2011 for the course ACG 2021 taught by Professor Hornik during the Summer '08 term at University of Central Florida.

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July_6th_lecture - J uly 6th lecture 1 Internal Controls...

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