Internal Controls

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Submitted By Rutasha
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INTERNAL CONTROLS RUTASHA BRABHAM 1XACC/280 AUGUST 7, 2011

Internal controls are beneficial to a company’s structure and organizational design. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization (internal controls are simply good business practices (Internal Audits, n.d.). There are five components of internal controls. Control environment, risk assessment, control activities, information and communication, and monitoring are the five components of internal controls.
The control environment is connected to the outline of the company. The control environment involves the integrity, ethical values, the company’s philosophy, and the competence of the entity’s people (US Regents, 2011). The control environment provides the structure for a company’s policies and values for their day to day activities. Control environment factors include integrity and ethical values, the commitment to competence, leadership philosophy and operating style, the way management assigns authority and responsibility, and organizes and develops its people, and policies and procedures (US Regents, 2011).
Risk assessment is a step in a risk management procedure. Companies use risk assessment as a guide to determine how risks should be managed within the company. Management use risk assessment to use as guides for preventing future occurrences within the company.
The control activities are the policies and the procedures that management uses to carry out day to day activities. They include a range of activities as diverse as approvals,…...

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