Monday 25 June 2018

Elements Of Internal Control System

Principal elements of internal control in a company is:

1. Organizational structure that can separate functional responsibility expressly. 

This organizational structure is the framework for the Division of functional responsibility to the organizational units that are set up to carry out the activities of the principal activities of the company Division of functional responsibility is based on principles, as follows:
  • Must be separated the functions of the operation and hope of the accounting function.
  • A function should not be given full responsibility for carrying out all stages of a transaction.

2. A system of record-keeping procedures and authority that provides sufficient protection against wealth, income and debt costs. 

Within the organization each transaction occurs or the basis of officials who have the authority to approve of the occurrence of such transactions. Therefore in the Organization should be made of the system that regulates and Division of authority for authorization upon implementation of any transaction. Thus the authorization system will then document management accounting can be trusted so that it will become a reliable input for process accounting.

3. A healthy Practice in carrying out the duties and functions of each unit of the organization. 

As for the ways that the company is in creating a healthy practice, namely:
  • The use of numbered forms printed with the sort of life must be accountable by authorities.
  • Sudden Inspection
  • Any transaction must not be implemented from the beginning to the end of a single person or a single organizational unit without interference from other persons or organizational units in certain things.
  • Rotation Office (job rotation)
  • Periodically held matching physical wealth with his notes.
  • Establishment of organizational units tasked to check the effectiveness of the internal control elements of the other.
  • To be effective in carrying out its work unit supervisor an intern must not perform the operation, functions and functions of accounting and storage should be responsible directly to top management (director)

4. Employees who quality in accordance with his responsibilities.

Among the four (4) principal elements of internal control elements need employees is an element of the system of internal control is most important. If the company has employees who are honest and components for other control can be reduced to a minimum and limit the company's liability remains able to produce reliable financial statements.

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