acct205ip3 - Running head: UNIT 3 IP INTERNAL Unit 3 IP...

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Running head: UNIT 3 IP – INTERNAL Unit 3 IP – Internal Controls <name removed to preserve anonymity> AIU Online 1
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UNIT 3 IP - INTERNAL Internal Control System Limitations Internal control systems are not perfect. If a company suffers from a small staff size, the ability to segregate duties effectively will be severely impacted. The human factor is another limitation that impacts every organization, and can include misunderstandings, fatigue, stress, and misinterpretation (K-state, 2011). Additionally, the cost of implementing a desired control should not exceed the anticipated befit of that control itself (K-state, 2011). Examples of Internal Control Procedures and Implementation Internal controls rely on the system of checks and balances to provide adequate insurance that each segment is functioning as intended with as little error or other problems as possible. There are 5 main segments of internal controls: Personnel, Authorization Procedures, Segregation of Duties, Physical Restrictions, Documentation and Record Retention, and Monitoring Operations (AIU Online, 2011). These fall within 5 elements: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring (Prescott.edu, 2011). Each of these segments have many different ways that implementation can be done, however we will focus on the first two – Personnel and Authorization Procedures – below with examples to outline how this can be achieved in an organization.
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acct205ip3 - Running head: UNIT 3 IP INTERNAL Unit 3 IP...

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