A Clear Look at Internal Controls: Theory and Concepts
27 Pages Posted: 13 Feb 2009 Last revised: 4 Apr 2010
Date Written: March 2010
Internal control is an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error. Internal Control is a major part of managing an organization. It comprises the plans, methods, and procedures used to meet missions, goals, and objectives and, in doing so, support performance-based management. Internal Control which is equal with management control helps managers achieve desired results through effective stewardship of resources. Internal controls should reduce the risks associated with undetected errors or irregularities, but designing and establishing effective internal controls is not a simple task and cannot be accomplished through a short set of quick fixes. In this paper the concepts of internal controls and different aspects of internal controls are discussed.
Keywords: Internal Control, Management Controls, Control Environment, Control Activities, Monitoring
JEL Classification: M41
Suggested Citation: Suggested Citation