Question

Discuss general management’s responsibilities for the accounting system and internal control structure of the organization.

Answer 1

Internal control refers to practices or procedures within a company to ensure that the company achieves the targets set in the strategy, uses resources economically and the information in support of management decisions is reliable. Thus it is responsibility of the management for establishing and maintaining a proper internal control structure and procedures for financial reporting. The general responsibilities of the management for the accounting system and internal control structure of the organization are as follows:

-- promoting orderly, efficient, effective and economical, operations and quality goods and services consistent with the organization's motive;

-- safeguarding resources of the organisation against loss due to mismanagement, errors, waste, abuse, and fraud and several other irregularities;

-- adhering to regulations, laws, and management directives; and

-- development and maintenance of accurate and reliable management and financial data and fairly disclosing that data in timely reports