Essay On Control Procedures

Control procedures in accounting entail steps and measures that a company’s uses to ensure that the financial reports received are valid and accurate. Organizations observe control procedures to minimize and identify the cases of accounting fraud. Furthermore, companies need control procedures in accounting to ensure that they forward accurate financial statements to tax agents. Control procedures ensure that the firm’s bookkeeping process remains transparent. The paper identifies various control methods used in accounting practice.
The first control measure in accounting entails checking organization’s reports to ensure to ascertain the validity of the entered data. Accountants perform this practice as the first step for ensuring that ensure all records are completely entered. A complete transaction contains all documents required by the business. These records ensure that all transaction details appear in the records. Missing records in a transaction may indicate some levels of inaccuracy in the presented reports. Incomplete records are also characterized with the presence of false figures in the reports.
Accountants also perform monthly reconciliations on subsidiary records. This targets establishing irregularities in the company’s reports at an early stage. Performing monthly reconciliations ensures that all transactions appearing on records are included in the main accounting statement. Another control procedure in accounting entails the segregation of duties. This includes assigning the role of managing firm’s transactions to only two to three people. This ensures that the employees are accountable for their actions. Essentially, the account auditing team can easily trace back any irregularities to these employees and question them accordingly.
Moreover, control procedures in accounting include the use of auditors as a control measure. Auditors perform independent investigation on the financial records of the company. The auditors identify the irregularities and inform the management on the accuracy of their financial statements. Accountants also check for accuracy in supporting records. This procedure entails checking of mathematical accuracy and balancing of accounts. This control measure ensures that unintended mathematical errors do not occur in the final records.
Organizations also implement electronic information security through computers and databases. This mainly restricts the access of business and accounting data by unauthorized parties. This is in consideration that unauthorized individuals may tamper with financial information. These security systems require authentication, which allow only authorized staff to access the financial data. Another control procedure in accounting entails the separation of duties. For example, the cost accounting department can operate differently from the financial accounting department. Separation of duties enhances the accuracy of the prepared accounting reports. Moreover, errors can easily be identified and corrected when duties are shared. Every department handles a specific task, which fosters integrity.
Documentation is another control procedure used in accounting. Documentation entails storage of the copies of all transaction details. Transaction details appear in receipts and cash received records. These documents show how cash flows from one company to another. The accounting departments should store bank statements to view the flow of money from the company’s account to other places.
Finally, accounting departments use cash control as a control procedure. Cash control entails restricting employees who can deposit cash on behalf of the company. These control procedure ensures that only few people have a direct control over the company’s finance. This fosters accountability and transparency. The need for control procedures in accounting cannot be overemphasized. The control procedures foster transparency and integrity in the accounting process. With effective control procedures, the company is at the position of accounting for all its expenditures.