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Learning Objective $06-$C$1$: Define internal control and identify its purpose and principles.

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An internal control system consists of the policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and uphold company policies. It can prevent avoidable losses and help managers both plan operations and monitor company and human performance. Principles of good internal control include establishing responsibilities, maintaining adequate records, insuring assets and bonding employees, separating recordkeeping from custody of assets, dividing responsibilities for related transactions, applying technological controls, and performing regular independent reviews.

Purpose of Internal Control

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An internal control system is used to do all of the following:

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check all that apply

Protect assets unanswered

Prevent all losses unanswered

Ensure reliable accounting unanswered

Control the entire operation