Accounting
Identify internal control principles.
(SO 2), C
The internal control procedures in Phillips Company make the following provisions. Identify the principles of internal control that are being followed in each case.
a. Employees who have physical custody of assets do not have access to the accounting records.
b. Each month the assets on hand are compared to the accounting records by an internal auditor.
c. A prenumbered shipping document is prepared for each shipment of goods to customers
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Answers
a. Segregation of Duties: By ensuring that personnel with physical custody of assets do not have access to the accounting records, this principle helps prevent fraud and error. b. Reconciliation: Reconciling the physical assets to the accounting records helps ensure that the information in the accounting systems is accurate and complete. c. Documentation Procedures: The use of prenumbered shipping documents helps ensure that all goods shipped are properly tracked and accounted for.
