Achieving strong internal controls

Accounting
Tutor: None Selected Time limit: 1 Day

List the measures that a business can use to achieve strong internal controls.
Dec 1st, 2014

First of all, upper management must set a system of internal controls in place. For instance, separation of duties in areas of finance and cash management where an employee can potentially steal/embezzle money from the company if the duties are not separated. 

Second, the upper management (CEO, CFO, controller, etc.) must set the tone at the top. This means their actions must be examples that will "set the tone" in the company. The business culture of integrity and high standards of ethics is set by management's action. Employees are highly influenced by upper management.

Third, there must be compliance with the relevant rules and regulations pertaining to asset and property management. For example, for public companies, the CEO and the CFO have responsibilities to establish strong internal controls and to attest to their assessment of the internal controls in place (Sarbanes-Oxley Act, 2002).  There are other reporting and compliance requirements to ensure that company assets and properties are protected. 

Finally, there must be constant monitoring of the internal controls to ensure that the system in place is functional and secures the protection of company assets. If there is a leak or break in the system, actions must be taken to make corrections so that properties and assets do not get lost or stolen. 

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Dec 1st, 2014

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