Question

Select a company with which you are familiar and describe the internal controls that you are aware of within the company. For example, if you go through the drive-through at a McDonald's the total cost of your meal is presented for you to see before you pay. The purpose of this control would be to help ensure that the cashier did not ring up one amount and tell you a different (higher) figure pocketing the difference.

What is the purpose of preparing a bank reconciliation? How often should one be prepared? Who should not prepare one? Why?

Answer 1

Internal Control, in accounting and auditing is defined as a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies

So, in brief we can say that rules, regulations and policies set up by and organisation to achieve its objectives is Internal Control

Introduction and company overview

The first macdonolds was opened in 1930 in california as first drive in store but in 1948 it became a complete restaurant and from their on it expanded its food chains not only in USA but in every part of the world especially in big countries and metropolis

In a company like macdonalds which serves fast food across the world must be able to monitor its internal control. It needs to specify its rules, regulations, policies, process and procedures to ensure its operations such as production, waste disposal, sales, inventory and employee's supervision

The Internal that company follows and we are aware of it are
1. Sepration of work : All the duties assigned to employes according to their job description. For this the HR department is assigned to design the task description of the employees.
2. Physical control : The goal of the business IC is to ensure the optimum use of the resources and assets of the store. With the aid of control over assets, these items are protected from destruction due to lack of monitoring system.
3. Documentation : With advanced technologies and the advert of the time and need, it is easy for one to record orders and entries.
4. Check and Balance : It is very important for the organisation to have regular check over the internal control. For this proper internal audit and external audit are carried out
5. Authorization : Employees of the organisation should understand the value of chain of command. There are times when employees follow orders without respect to who really has the authority. Rules are designed to keep the harmony between the employees of the organisation

Purpose of preparing bank reconciliation

The Bank Reconciliation statement is prepared to ensure the accuracy of the balances as shown by cash book and pass book

It helps to check the accuracy of the entries made in both the cashbook and passbook

It also helps to rectify errors made in those books.

Bank reconciliation is done once every month and generally at the end of your bank's reporting period. Some people like to reconcile more often

Any person or company which do not have a bank account or deals only in cash need not to prepare BANK RECONCILIATION STATEMENT