internal control procedures

Question 1

what is internal control?

Answer 1

the procedures and processes (strategies) that an organisation has established to protect itself from internal and external theft or fraud

Question 2

why do organisation’s need goo internal control?

Answer 2

because without it it would be easy to manipulate a computer system or a practice for one’s own gain

Question 3

what is an example of internal control?

Answer 3

the division of duties amongst staff, so that not one person has too much power and can’t take advantage of the assets of the organisation.
e.g. person in charge of acc rec isn’t also responsible for the organisation’s bank account

Question 4

how might an organisation protect its inventory?

Answer 4

• security cameras
• security tags
• for retail, to have staff in fitting rooms to monitor the clothes customers try on.

Question 5

what are the types of internal control?

Answer 5

• division of duties
• 2 or more people sign a check or digitally sign for withdrawal or cash payment within a bank acc
• good firewall protection to reduce risk of sensitive info taken by hackers
• secure banking facilities when selling online (paypal)
• background check staff
• checking off inventory coming in against the purchase/delivery order (invoice) to reduce inventory loss
• have time sheets
• contracts that set out obligations to the business