The importance of a control system within the business.
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The importance of a control system within the business Essay Sample Internal controls are methods or procedures adopted in a business to: They also segregate duties within the company and limit one persons control over an entire area.
For example- never have one person writing, receiving and reconciling your business accounts. As the owner of Millennium Land Developers, it is your responsibility to ensure that the business has a good internal control system.
As they flow through the entire business to: To make sure everything is covered in the reporting procedures and the activities currently undertaken by the business are in line with the objectives of the business. Makes sure the physical and monetary assets of the business are safe from theft, errors and fraud.
Enabling the internal control system quickly identifies fraud and errors when they occur. A method of dealing with dishonesty or fraud if detected — Reduce exposure to risks: Minimising the probability of any unexpected events happening — Ensuring proper financial reporting: Maintains complete and accurate financial reporting requirements by management and legislation and minimising lost time by fixing mistakes and ensuring resources are efficient and mistake free when allocated — Completeness: That all the required information are included in the business reports.
These include transactions and records. Making sure that the right amounts are recorded into the correct accounts — Authorisation: Makes sure the correct level of authority deals with approvals, computer access and payments etc. That the documents for the activity performed have incurred the liability — Existence: Makes sure the existence of an asset or liability has been received.
Whether or not a purchase has been received for goods or service. Makes sure that any errors in the system have been identified and processed — Segregation of duties: Maintains certain duties are performed by different positions and kept separate.
Ensures the financial reports are in line with regulations and principles. A good system of internal controls will help the business in numerous ways. With a good system of internal controls, it will ensure that mistakes will be minimal and this will save time and money for the business.
With an internal control system, staff will have the protection of the system to back themselves up if in any way there is a dispute with an action. A good internal control system will deter future criminals committing a crime against the business such as fraud, as there is a higher chance of being detected and getting caught.
There are four steps in setting up a Internal Control System. Plan- determine what controls are required to run the business. Do- Implement the planned controls Check- monitor the performance of the controls Act- modify the system to take account failures or changes in circumstances, etc I suggest to start at the low end of procedure these include:The Importance Of A Firm Within A Business Network Words | 7 Pages.
The aim of a firm within a business network is above the normal profit or at least normal profit which means when the revenue is . The Importance of Control in management are as follows: (1) Reduces Risk: Control eliminates the risk of non-conformity of actual performance with the main goals of the organisation.
Control is the Size of the business: Control system helps the top management to extend the frontiers of decentralisation without the loss of control. . Controlling as a function of management is of great value and importance in a business organization to ensure that the actual state of affairs of a business is along the lines of what is expected to be.
Some refer to it as “internal control” or even as an accounting system set up to safeguard assets. Let’s take a look at why inventory control is so important as well as what’s involved in developing an effective system. Controlling as a function of management is of great value and importance in a business organization to ensure that the actual state of affairs of a business is along the lines of what is expected.
The employee can say that he/she acted in the way noted by the internal control system and acted within their limits resulting in the business not being able to blame the worker.
- Detection: A good internal control system will deter future criminals committing a crime against the business such as fraud, as there is a higher chance of being.