The paper 'Effective and Efficient Asset Management' is a perfect example of a management assignment. Internal controls are a necessary tool for auditors since internal control assist in the safeguarding funds, provide effective and efficient asset management, and allow accurate financial accounting. Internal controls may not remove all irregularities and errors, but they can bring to the attention of the management in case of any potential problems thus making the auditors realize the main issues before they escalate. This is an error of omission happening during posting. This error increases the credit side of the profit and loss account by $5000.
The assets amount in the balance sheet will indicate a higher amount by $5000 while the sale of the asset should have reduced the amount. This is an error or omission. The amount on the credit side of the profit and loss account will be more by $800 while the balance sheet will not be affected. This is an error of principle. This has no effect on the profit and loss account but in the balance sheet, it leads to the recording of a lesser amount by$500 in the fixed asset side. This is an error of commission where the wrong amounts were incorrectly entered.
In the place where the invoices were recorded as receivables in the sales journal instead of debtors ledger; this makes it to be an error of principle. In the profit and loss account, the amount increased credit side indicating more income by & 610. In the balance sheet, there were more creditors who were supposed to have been paid the amount of $760. The differences in the amounts of $150 indicate the error of commission. This is an error of principle.
In the profit and loss, the amount on the credit side will be increased by $2000 while the balance sheet will give the current asset account to be more by $2000.This is an error of principle. It raises the number of assets in the balance sheet by $1000, and it has no effect on the profit and loss account. Five activities of financial or administrative controlEnsures that the company gets and include in its books any revenue which is entitled to the businessEnsures the assets of the company are accounted for to the latter. Ensures expenditure is incurred when it is authorized properly. Ensures the records of accounting provide a basis that is reliable for accounts preparationEnsures the company’ s liabilities are recorded properly and provision is made known or expected lossesEffect of poor management of the internal control system on organization structureInternal control systems reduce the amount of work and personnel needed to process financial information hence resulting in a lean structure of the organization.
Poor management of internal controls will lead to a bloated or extended structure of the organization due to the non-concentration of functions. Comparison list between an individual tax deduction and business tax deduction.