1、Hammed Arad (Philae)Department of accounting, Islamic Azad University, Hamadan, Iran Barak Jamshedy-NavidFaculty Member of Islamic Azad University, Kerman-shah, IranAbstract:internal control is an accounting procedure or system designed to promote efficiency or assure the implementation of a policy
2、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 managem
3、ent control helps managers achieve desired results through effective stewardship of resources. Internalcontrolsshouldreducetherisksassociatedwith undetectederrorsor irregularities,butdesigningandestablishingeffective internal controlsis not a simple task and cannot be accomplished through a shortset
4、ofquickfixes.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, Monitoring1. IntroductionThe necessity of controlin new variable business environment is not
5、latentforany personandmanagementasaresponsefactorfor stockholdersandanother shouldimplementagreatcontrolover his/herorganization. Control is the activity of managing or exerting control over something. he emergence and development of systematic thoughts in recent decade required a new attention to b
6、usiness resource and control over this wealth. One of the hot topic a bout controls over business resource is analyzing the cost-benefit of each control.Internal Controls serve as the first line of defense in safeguarding assets and preventing and detecting errors and fraud. We can say Internal cont
7、rol is a whole system of controls financial and otherwise, established by the management for the smooth running of business; it includes internal cheek, internal audit and other forms of controls.COSO describe Internal Control as follow.Internal controls are the methods employed to help ensure the a
8、chievement of an objective. In accounting and organizationaltheory, Internal controlis defined as a processeffectedbyanorganizationsstructure, workandauthority flows, people and management information systems, designed to help the organization accomplishspecific goals or objectives.It is a means by
9、which an organizations resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud andprotectingtheorganizationsresources,both physical(e.g., machinery and property) and intangible (e.g., reputation or intellectual propertysuchastrademarks).Attheorga
10、nizationallevel,internal control objectivesrelatetothereliabilityoffinancial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction level, internal control refers to the actions taken to achieve a specifi
11、c objective (e.g., how to ensure the organizations payments to third parties are for valid services rendered.) Internal controlprocedures reduce process variation, leading to more predictable outcomes. Internal controls within business entities are called also business controls. They are tools used
12、by managers everyday.* Writingprocedurestoencouragecompliance,locking yourofficetodiscourage theft, and reviewing your monthly statement of account to verify transactions are common internal controls employed to achieve specific objectives.Allmanagersuseinternalcontrolstohelpassurethattheirunits ope
13、rateaccordingtoplan,andthemethodstheyuse-policies, procedures, organizational design,andphysicalbarriers-constitute. Internal control is a combination of the following:1. Financial controls, and2. Other controlsAccordingtotheinstitute of chartered accountants ofIndiainternal control is the plan of o
14、rganization and all the methods and procedures adoptedbythemanagement ofanentitytoassistinachieving management objective of ensuring asfar as possiblethe orderly and efficient conduct ofits businessincluding adherenceto management policies, the safe guarding of assets prevention and detection of fra
15、uds and error the accuracy and completeness ofthe accountingrecords andtimely preparation of reliablefinancialinformation,thesystem of internalcontrolextendsbeyond thosematterswhichrelate to the function of accounting system. In other words internal control system of controls lay down by the managem
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