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Internal accounting controls and fraud prevention are receiving increasing attention from businesses nonprofit organizations and governmental entities Accounting is sometimes thought of as a mundane activity taking a back seat to marketing and management endeavors that are thought of as being more creative However management of every enterprise with financial transactions or matters is dependent on reliable and timely accounting and financial information for decision-making purposes No enterprise can exist for long without appropriate internal accounting controls Unfortunately in some circumstances internal accounting control only receives adequate attention after a major public embarrassment perhaps resulting from negligent loss or misplacement of assets mismanagement erroneous financial recording or reporting or outright fraud Fraud prevention and internal accounting control are two of the most interesting accounting-related topics Internal control and fraud are closely related but internal control tends to be identified with prevention and detection whereas fraud more typically is identified with wrongful means of violating the enterprises accounting and disclosure functions INTERNAL CONTROL COMPONENTS The accounting function significantly depends on the senior managers ability to receive timely competent and complete accounting information For this reason internal control is the first and primary element of the accounting system The importance of internal control cannot be overemphasized An analysis of internal control helps quantify the extent to which the accounting records of the enterprise can be relied upon Internal control is one of the first areas that a CPA evaluates before beginning what is generally considered the substantive portion of the audit process Internal control is designed to provide reasonable cost-effective assurance of safeguards against unauthorized access to or use of the enterprises assets that the financial records and accounts are sufficiently reliable for reporting and management purposes and of compliance with applicable laws and regulations Management of the business is responsible for the design and operation of the accounting reporting and internal control systems of the business--the independent auditors may
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