Question

Is internal control concerned only with enhancing the accuracy of accounting records? Why or why not?

Answer 1

No, internal control is not concerned only with enhancing the accuracy of accounting records. That is, internal control is concerned with enhancing the accuracy of accounting records along with firm's other internal aspects such as adherence to company policies, business operations on planned track, division of responsibilities, etc.

Main objective of internal control is to make sure that all policies and procedures laid down by the firm's management to carry out firm's business activities are always complied with by all personnel and workers working in the organization.

For each business activities such as production, assembling, packing, despatching, sales, service, customer service, payment to suppliers, customer credits, collection periods, banking communications, cash handling, materials handling, maintenance of records, etc., management would lay specific policies and procedures with the intention to achieve organization goal effectively within the stipulated time frame.

All personnel and workers at top level, middle level and bottom level are expected to adhere to such policies and procedures framed and implemented by the management. Control machanism designed to make sure the same is technically called as INTERNAL CONTROL SYSTEM and is headed by responsible personnel of the firm.