From the course: Accounting Ethics
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Internal controls and audit
From the course: Accounting Ethics
Internal controls and audit
- If ethical accounting is about trust, then building stakeholder confidence is about assurance. Assurance is having proper controls in place to verify and validate internal activities. The verification of the controls and processes is an audit. When done well, internal controls and audits are meant to limit questionable or fraudulent activity. They provide the board of directors reasonable assurance when reporting financial results. The intent is to protect both the organization and employees from acting inappropriately and promoting financial integrity. Effective internal control processes should protect the organization in two ways. First, by implementing preventative measures to minimize opportunities for unintentional errors or intentional fraud. And second, identify small errors early before they become big problems. Designing an effective internal control process requires clear policies and procedures, physical…
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