There are a few limitations to inherent in all of the internal control systems. So no matter how good the internal controls are designed, there are reasonable assurance that are achieved. Listed below are internal control systems:
-Judgement: The effect of controls which is limited by decisions that are made by human judgements. Which also under pressure of how to conduct business that is going on the in information that is provided.
-Breakdowns: When it comes to the best designed internal controls they can break down. Sometimes employees can make simple mistakes or maybe misunderstand the instructions. Mistakes or errors can also come from new technology and complexity of computerized of computerized information systems.
-Management Override: When it comes to override this comes from high level personnel. Which is prescribed policies and procedures that are for personal gain or even advantages. Sometimes this is confused with management invention.
-Collusion: Sometimes control systems are circumvented by the collusion of employees. Individuals that act collective sometimes they can alter financial data or some of the management information in some matters that are not identified by the control system.
There are a few internal control procedures that can help out. Thought I would list a few on my report:
-Authorization: Make sure all transactions are approved responsible personnel. This is when the general authority has looked at the transaction before it is recorded.
-Completeness: This is to make sure no valid transactions has been left out of the accounting records.
-Accuracy: This makes sure all valid transactions are accurate, with the originating transaction data and also the information is recorded in a timely matter.
-Validity: Recorded transactions that fairly represent the economic events that have occurred and also has been executed with the managements general authorization.
-Physical Safeguards and Security: Make sure that access to physical assets and information systems are being controlled and are properly restricted only to authorized personnel.
-Segregation of Duties: This is to make sure duties are assigned to individuals in a matter, in which only one individual is controlling the recording function and someone to do the procedures relative to processing the transaction.
When it comes to internal controls they should be well designed and should meet most, if not all of these controls.
When trying to figure out why the journal entries are missing. There are a few things that come to mind.
1. There could be a problem where there is not enough staff. Which is
