Internal control1 comprises the plan of organization and all the coordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies.
Fraud is intentionally made while error is not intentionally made. Examples of fraud is theft of company assets such as cash and inventories and presentation of a financial statement that shows net income that is higher than what the real net income should be. An error occurs when the accounting clerk records payments for a $20,000 building repair as remainders and maintenance expense instead of capitalizing the cash paid with a debit to the building account and depreciation this amount over the of the remaining life of the building.
Administrative controls includes the plan of the organization and procedures and records concerned with decision processes leading to management's authorization of transactions that promotes operational efficiency and adherence to managerial policies.
Accounting controls comprises the plan of organization and the procedures and records that are concerned with the safeguarding of assets and reliability of financial records. It involves systems of authorization and approval controls over assets, internal audit and other financial functions.
1. The purchasing agent makes the purchase orders 2and then sends it to the supplier. The purchasing agent then gives copies to the department head, receiving department, and accounts payable & one copy is filed in the open requisition file.
requisition to approve the purchase order. ...