"Accounting is closely connected with control." In what way the controls are to be effective ?

Segregation of duites safeguard of assets

financial budget is one of many ways that makes controls are effective and this is show how accounting is closely connected with control

- financial information is reliable, so that managers and the board can depend on accurate information to make programmatic and other decisions

- assets and records of the organization are not stolen, misused, or accidentally destroyed

- the organization's policies are followed

- government regulations are met

Controls over your assets including machinery, office equipment, stock etc should be strong, so that their safety is ensured. If our accounting records are in good shape only then we can better these controls. Because yearly / quarterly comparison of this record can highlight significant change in these items and so help strengthen our controls.

For instance purchases have increased, this can also mean wastage or usage of stock (inventory) have increased. Company can replace it's old technology machine or change pattern of stock count in a way so that it happens on a day when it  is least expected to occur. In this way theft may be identified. 

Check issuanceThe number of signatures on checks, dollar amounts which require board approval or board signature on the check, who authorizes payments and financial commitments, etc.DepositsHow payments made in cash (for admissions, raffles, weekly collection plate, etc.) will be handled, etc.TransfersIf and when the general fund can borrow from restricted funds, etc.Approval of plans and commitments before they are implementedThe annual budget and periodic comparisons of financial statements with budgeted amounts, leases, loan agreements, and other major commitments.Personnel policiesSalary levels, vacation, overtime, compensatory time, benefits, grievance procedures, severance pay, evaluation, and other personnel matters. The Accounting Procedures ManualThe policies and procedures for handling financial transactions are best recorded in an Accounting Procedures Manual, describing the administrative tasks and who is responsible for each. The manual does not have to be a formal document, but rather a simple description of how functions such as paying bills, depositing cash, and transferring money between funds are handled. As you start to document these procedures, even in simple memo form, the memos themselves can be kept together to form a very basic Accounting Procedures Manual. Writing or revising an Accounting Procedures Manual is a good opportunity to see whether adequate controls are in place. In addition, having such a manual facilitates smooth turnover in financial staff.Maintaining Effective ControlsThe FINANCE/ACCOUNTING  director is commonly responsible for overseeing the day-to-day implementation of these policies and procedures. The auditor's management letter is an important indicator of the adequacy of your internal accounting control structure, and the degree to which it is maintained. The management letter, which accompanies the audit and is typically addressed to the board as trustees for the organization, cites significant weaknesses in the system or its execution. By reviewing the management letter with the executive director, asking for responses to each internal control lapse or recommendation, and comparing management letters from year to year, the board has a useful mechanism for monitoring its financial safeguards and adherence to financial policies.As your profit changes and matures, and your funding and programs change, you will need to periodically review the internal accounting control system which you have established and modify it to include new circumstances (bigger staff, more restricted funding, etc.) and regulations (such as receiving federal awards with increased compliance demands.)Internal Controls Simplified ACCOUNTING  INFORMATIONS  USED  AS  CONTROLS: CASH-Control Cash Drawers And Credit Cards -Control Cash Receipts And Deposits -control  system   to  Manage Problem Checks -control  system  to  Manage Wire Transfers -Control to  Cheque  Signing Authority -control  system  to  Manage Check Requests -control  system  to   Manage Bank Account Reconciliations -control  system  to  Manage Petty Cash GENERAL & ADMINISTRATIVE-control  system  Manage Chart of Accounts -system  to  Control Files And Records Management -control  system  to  Manage Travel And Entertainment -system  to  Control Management Reports -system  to  Control Period-End Review & Closing -control   system  to Manage Controlling Legal Costs -control   system  to Manage Taxes And Insurance -system  to  Control Property Tax Assessments -control  system  to  Manage Confidential Information Release -system  to  Control Documents 

Segregation of Duties

personal Control

Arithmetical Accuracy

Management ControlOrganizational  Control

 

 

1- Accounts people are independent to work for the safeguarding of organization assets, Inventory management, purchase control and payments.

2- Internal Audit Systems exists

3- Management of Fixed Assets exists at the time of purchase and fare disposal

4- Costing and Budgeting measure are effective implemented

5- Error free management reports are being issued

agree with answers ...........................................

controls considered effective when it is work with accounting to achieve the firm objectives (this means that we built effective accounting information system )

I agree with all answers  >>>>>>>>>>>