Internal Controls

Internal Controls

Introduction

Book keeping is the basic foundation of any accounting system. It is concerned with updating the accounting records, and maintaining them. Accounting system provides a mean to communicate necessary economic and financial information, to users of such information, which enables them to make informed judgments and decisions (Sangster & Wood, 2010). In other words, accounting is the language of a business. Without a proper and effective accounting system, a business would not be able to survive longer. One of the most important concerns for an accounting system is that it should be reliable and efficient. In order to ensure its reliability and effectiveness, there should be appropriate internal controls in place. These internal controls provide at a minimum a guarantee that the accounting system and other operations of a business, are operating as desired. According to (The Institute of Internal Auditors, 2012), internal controls are steps taken by management, and other persons responsible for managing the organization; to mitigate risk, and ensure that organizational objectives and plans are achieved. These internal controls provide a reasonable assurance that, ensure smooth operations of the organization. Apart from ensuring that organization's goals and objectives are achieved, these internal controls also help in minimizing the overall fraud opportunities. Frauds in any business leads them to a downside journey. According to (Gleim, 2007), a fraud can be described as any unlawful act, which results from, violation of trust, cheating, dishonesty and concealment. The most common objective behind any fraud is to get a monetary benefit, or obtain a property, or to secure personal advantage. However, these acts are not just depended on a real threat.

Discussion

Using the organization's resources for direct benefit without the knowledge of it to the management is also considered as a fraud. One of the primary objectives of internal controls is also to identify and prevent fraudulent activities. There are ...