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Learning Objective $07-01$ Define what is meant by internal control and describe some key elements of an internal control system for cash receipts and disbursements.

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Internal control refers to the plan designed to encourage adherence to company policies and procedures; promote operational efficiency; minimize errors, thefts, or fraud; and maximize the reliability and accuracy of accounting data. Key elements of an internal control system for cash receipts and disbursements include separation of record keeping from control of cash duties and the periodic preparation of a bank reconciliation.

Meaning of Internal Control

Knowledge Check $01$

Which of the following are categories set forth in COSO$$s framework for designing an internal control system?

Note: Select all that apply.

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Compliance with applicable laws and regulations

Compliance with applicable laws and regulations

Effectiveness and efficiency of operations

Effectiveness and efficiency of operations

Reliability of financial reporting

Reliability of financial reporting

Safeguarding the company$$s assets