Analyzing the Managing Industrial Unrest: a Caribbean Conundrum from a Cultural Implications Angle

670 Words May 29th, 2015 3 Pages
Question 1 of the 2011 Examination Paper

The success or failure of an entity depends on its system of controls both accounting and administrative. Identify and discuss some of the key factors of the internal control systems of an organization with which you are familiar.

Internal Control is an integral process that is effected by an entity’s management and personnel and is designed to address risks and to provide reasonable assurance that in pursuit of the entity’s mission, the following general objectives are being achieved:

* Executing orderly ethical, economical, efficient and effective operations - the operations have to be well organized, methodical, and consistent with the organizations’ missions; * Fulfilling
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Administrative Controls are all the methods and procedures that facilitate management planning and control of operations; whereas Accounting Controls are all the methods and procedures that authorize transactions, safeguard assets, and ensure the accuracy of the financial records.

Internal control consists of five interrelated components:

* Control environment * Risk assessment * Control activities * Information and communication; and * Monitoring

Internal control is designed to provide reasonable assurance that the entity\s general objectives are being achieved. Therefore clear objectives are a prerequisite for an effective internal control process.

The control environment is the foundation for the entire internal control system. It provides the discipline and structure as well as the climate which influences the overall quality of internal control. It has overall influences on how strategy and objectives are established , and control activities are structured.

The entity would be required to develop an appropriate response to risk as it seeks to achieve its mission and objectives.

The major strategy for mitigating risk is through internal control activities. Control activities can be preventive and/or detective. Corrective actions are a necessary complement to internal control activities in order to achieve the objectives. Control activities and corrective