2.1 Internal Business - Internal Controls Flashcards
What is a policy?
A policy is a set of guidelines to help businesses make
decisions.
What is a procedure?
A procedure describes how each policy can be put
into action in a business.
Why are policies and procedures important?
Policies and procedures are important because they allow for better decision-making in a business. This is particularly important for a large business, as having policies and procedures will ensure that all staff have guidelines as to what they can do and cannot do in the workplace.
What are internal controls?
Internal controls are methods put in place by a company
to help a business achieve goals and prevent errors.
What are some examples of internal controls?
Separation of duties - not just having one person doing one task e.g. paying the bills or paying employees
Signing off payments and purchases by two people
Keeping documents/records so that things can be easily tracked and checked by others for errors/fraud
Locks and cameras on areas that contain cash, such as the till
Every employee having a single logon to the computer system so actions at work can be traced
What are the benefits of internal controls?
- Prevent fraud by having a way of checking and ensuring nothing weird is happening.
- Prevent errors by having a way of checking by another person or by the system.
