Managerial Accounting for Internal Control Accounting Systems

Managerial Accounting for Internal Control Accounting Systems

Memo

 

From:  Management, Accounting Department

To:       the C.E.O.

Date:   25 March 2011

Re:       Importance of Internal Accounting

 

I am writing this in order to explain to you the objectives and the importance of internal control systems in relation to this company.

 

The main objectives of internal accounting systems are:

  • To ensure that the information offered is reliable and can be used by the auditors to prepare the final audit report.
  • To prevent the occurrence of errors and frauds in the information recorded in the accounting records and the financial statements.
  • To prevent the theft or destruction of the company’s assets and records caused by malicious or unintentional activities.
  • To ensure that the company’s policies kept in place are followed.
  • To ensure that the government regulations put in place are followed and met (Needles, Powers & Crosson, 2011).

The internal accounting systems also include the internal control accounting systems. All these ensure that the accounting systems are functioning as they were intended. They also make the other managers work easier as they guide the employees in the accounting department on what or what not to do.

 

The characteristics of these systems are as follows:

  • They are put in place by the management in order to ensure the smooth flow of running in the accounting department and the business in general.
  • Lack of adherence to these controls put in place leads to a penalty stated by the management.
  • They can be changed if the management finds it necessary (Jackson, Sawyers & Jenkins, 2008).

 

A manager for internal controls ensures that all these systems are fully implemented without compromise. He is also able to make any follow ups of any unexplained activity as compared to a general manager who might not be able to note these activities.

 

If the company is to ensure that all the business ethics are followed, certain things need to be adjusted in the company’s management. There should be managers delegated to ensuring that these specific policies and activities are followed to the letter. The international Standards of accounting require businesses to have internal control businesses put in place for the reasons mentioned earlier. Dysfunctional systems raise many questions from the auditors and may be included in the auditor’s report. This is not good for any particular business or organization (Macintosh & Quattrone, 2010).

 

The code of ethics expects accountants to work professionally and with due care. The managerial accountant’s role is to ensure that the systems put in place are well followed and implemented in order to ensure the smooth flow of the business especially in the accounts department. They will be answerable to the auditor’s in a much easier way as compared to the other higher managers. I hope that you will consider this.

 

With regards,

 

Manager,

Accounting Department

 

References

Jackson, S.R., Sawyers, R.B. & Jenkins, J.G. (2008). Managerial Accounting: A Focus on Ethical Decision Making. Ohio, OH: Cengage Learning.

Macintosh, N.B. & Quattrone, P. (2010). Management Accounting and Control Systems: An Organizational and Sociological Approach. Indianapolis, IN: Wiley Publishers.

Needles, B.E., Powers, M. & Crosson, S.V. (2011). Financial and Managerial Accounting. Ohio, OH: Cengage Learning.

 

 

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