Types of Controls
Types of controls needed to ensure accuracy and reliability in the information the business provides include:
- Regular reconciliation of accounts.
- The number of documents is sequentially set out to avoid duplication.
- Constant comparison between budgeted and actual figures.
- Full segregation of duties.
- Making sure that there are independent checks.
- Making sure there are procedures for proper authorisation of any payments.
- Making sure that there are proper authorities required for certain levels and access.
Limitations of Internal Controls
- Error in judgement:
All businesses have to rely on honesty of staff, so owners have to rely on using their judgement when recruiting new staff. Situations can easily arise which can lead staff to commit fraud or be dishonest if the opportunity arises. Financial problems, addictions and unhappiness can cause people to try and pervert the rules of honesty. Owners have to use their judgement.
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