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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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What are the five categories of control activities?

To determine

Introduction:

Control Activities:

These are the policies and procedures established by the top management in order to insure that the goals and objectives of the organization should be met. They are directly related to the accounting system and financial statements which may vary from one business to another.

The Five categories of control activities.

Explanation
  • Authority & Responsibility should be clearly defined −Both the things should be clearly defined and there must be a delegation of work in the organization so that each individual must perform their task in a better way and should be responsible for performing their individual tasks. If they do any mistake while performing their task, they are only liable for their mistake.
    1. Separation of Duties **minus; There must be segregation of duties in the organization so that each individuals can perform their tasks in a better way and burden can be segregated in an easy way. It helps in reducing the likelihood that records could be used to stop mis-representation and fraudulent activities and increases the likelihood of the non-disclosure of the facts and figures.
    2. Adequacy in Documents & Records − Accounting records are generally prepared for the mangers, owners, and others both inside and outside the business in order to maintain the adequacy of the financial statements of the organization. Summary records and their underlying documentation must provide information about specific activities and help in the evaluation of individual performance...

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