Question

Pat Buhn is the new owner of Young Co. She has heard about internal control but is not clear about its importance for her business. Explain to Pat the four purposes of internal control, and give her one application of each purpose for Young Co.

Answer 1

Answer: Physical safeguard & security, Accuracy, Segregation of duties, Handling errors

Explanation:

Internal control could be defined as the process of handling an organization accounting and auditing process with it's specified objectives in compliance with laws, regulations and policies.

Here are the four purpose of internal control;

a) Physical safeguard & security; this is to ensure that physical assets and information have a controlled asses, and it's not easily assessible by anyone.

b) Accuracy: this is to ensure that all transactions are accurate when records are checked with the source of information where the transaction took place and the time it occurred.

c) Segregation of duties; this ensures that one individual cannot have access to the recording of information and processing of transaction.

d) Handling errors; this ensures that errors are checked at any stage with transaction occurred with corrections also made