Question

Is "internal control" the only organisational policy and procedures can be used to reconcile and monitor the financial accounts? If it is please explain?

OR if there is others type of policy and procedures can be used to reconcile and monitor the financial accounts, list them and explain why and how?

(Consider it's Australian accounting environment) (Please type up your answer)

Answer 1

Internal controls is a process which assures  that organization's objectives of operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies are achieved.

It is considered as one of the widest measure to monitor the workings of the company. However in the ever increasing complexity in the business world it would be inappropriate to rely only over internal control practices. In an accounting environment, company has to follow procedures like Budget monitoring also as a policy to reconcile and monitor the financial accounts. Budgets are prepared at the start of the financial period keeping in view the past performance, present obligations and resources, and future prospects. Org. may prepare budgets of different functions like sales, purchase cash as well for long term as well as short term. By monitoring the current positions from the budgets prepared, organisation may analyse the reasons for the deviations and take steps accordingly.