Accounting & the Use of Internal Controls

Internal controls in an accounting context refer to the system of policies and procedures established by an organization to monitor and regulate activities related to organizational objectives related to the protection of an organization's assets or assets under the control of an organization (Needles, Powers, Mills, and Anderson 287-288). The effective implementation of internal controls depends upon the creation of a control environment within an organization wherein individual and organizational integrity is a paramount value. In turn, the creation of such an environment depends directly upon the active support of senior organizational management (Wallace 32).

The specific character of internal controls applied to the protection of assets tends to depend upon the unique characteristics of the operational environment within which risk to the integrity of assets exist. B

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rs. It is important to remember that, while an organization establishes internal control procedures for each operation wherein assets are at risk, the several sets of internal control procedures are a part of the larger organizational system of internal controls. Thus, the integrated functioning of internal controls for cash transactions, materials acquisition, vendor payments, inventory management, and the myriad other assets protection functions in an organization creates a unified whole for the protection of an organization's assets or assets controlled by an organization (Heiman-Hoffman, Morgan, and Patton 75-77). The following internal control policy of the Halliburton Company illustrates a comprehensive organizational system of internal controls. Authorization. The only transactions to be entered into by the Company are those which are executed in accordance with management's specific authorization or established, formalized policies and procedures. Approval. No transaction will be recorded in the accounts of the Company unless it is within the scope of written policies and procedures or is specifically and formally approved by an appropriate and designated employee. Such approval requires the determination that the tr
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Approximate Word count = 1988
Approximate Pages = 8 (250 words per page)

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