This research examines the use of internal controls in accounting. To elaborate on this examination, the research covers in somewhat greater depth the internal control business model for a cash transactions operation. A discussion of the similarities and differences between the generic internal control business model for a cash transactions operation and the internal controls applied to the handling of cash in an operation of the New York City Police Department (NYPD) further extends the illustration of the application of internal controls in an accounting context.
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. By way of illustration, the specific procedures required to protect cash within an environment wherein many transactions occur likely differ from those required to protect physical property or to protect against unauthorized disbursements from bank accounts. There are, however, global procedures that are applicable to internal controls in all types of asset protection environments. These global procedures are as follows (Needles, Powers, Mills, and Anderson 288):
Segregation of Incompatible ...