INTERNAL CONTROL AND ACCOUNTING SYSTEM

Internal Control and Accounting System

Purpose of Accounting Functions1

Structure and Organization of Accounting Functions2

Significance of financial Reporting4

Income statement4

Statement of Cash flow5

Statement of financial Position5

Overview of the Business (critical external relationship with stake holders)6

How Organizational Structure Affect Accounting System7

Affects of External Regulation9

Affects of Organizational Procedures and Policies10

Various kinds of Frauds10

Detecting the Frauds11

Compliance with the Statutory Requirements12

Potential errors12

Potential frauds12

Effective Internal Control13

Training, Manuals, written information and Help Menu14

Conclusion15

References17

Internal Control and Accounting System

Purpose of Accounting Functions

The core function of accounting is reducing the level of uncertainty in controls and decision-making processes. on the other hand, the fact reveled is that giving any one credit to the accounting system is not going to be enough due to the fact that it perform multiple tasks. Accounting basically works for a strong organizational system which is mutually supporting organizations is for the sake of supporting the legitimization processes, at the same time as the main function of accounting in any particular strong organization with a dependent environment is for providing support to the organization in its exercise of power (Mellemvik et al, 1988).

The eventual purpose of accounting is to generate a set of information for various kinds of users. These users make use of the information provided for the sake of making economic decisions which are well informed. The following is the list of different types of information which are provided by the accounting's reporting.

Some of the very basic functions of the accounting can be stated as the results of the operations. These results are the profits which are generated by any company in a specific point of time. The time span might vary in different settings like yearly, quarterly, monthly etc. These profits are calculated by deduction of all expenses from the income. The amount which is found in the end is called the net income. Another thing is the financial position, in this one the sources of generating investments are judged and also the external sources of investment generation are thoroughly discussed (Mellemvik et al, 1988).

The record keeping is the most primary function which is accomplished by the accounting. This is done by going through the accounting cycle and bringing out what is really the core purpose of the all the book keeping, which is to have a better track of all the financial numbers in a really comprehensive manner. It also protects business property from the unjustified usage. The accountant due to all this has to design a system of accounting which is able to protect all the assets from any sort of unjustified use. Accounting is a system which is able to meet the legal requirements and a system which is complied with the law. It provides any business a proper and lawful manner to record the income tax returns, returns for sales tax and other such issues (Mellemvik et al, 1988).

The Inkwell Limited has an efficient and experience staff members in the finance department and the level of sales and inventory they are managing so far are also ...