Describe the basic internal control procedures.
- Control procedures are actions that company personnel take to make sure that policies set forth by management are followed.
- Important accounting controls are concerned with safeguarding assets and producing accurate and timely financial statements. They include:
- Proper authorizations-only certain personnel may authorize transactions.
- Segregation of duties-physical custody of assets must not be combined with the ability to account for those assets.
- Independent verification-for example, an inventory count.
- Safeguarding of assets and records-both must be adequately protected.
- Independent review and appraisal-done primarily by internal audit.
- Design and use of business documents-source document control.