Week 5 - Internal Controls

Question 1

What are internal controls?

Answer 1

Not just a set of procedures and checks, but a whole range of activities and attitudes

Question 2

What is the first reason companies need to maintain a sound system of internal control?

Answer 2

To enable transactions to be properly authorised and recorded

Question 3

What is the second reason companies need to maintain a sound system of internal control?

Answer 3

To produce reliable and timely management information - so correct decisions can be made by management and stakeholders

Question 4

What is the third reason companies need to maintain a sound system of internal control?

Answer 4

To authorise access, so as to safeguard assets

Question 5

What is the fourth reason companies need to maintain a sound system of internal control?

Answer 5

To deter and detect errors, fraud and theft

Question 6

What is the fifth reason companies need to maintain a sound system of internal control?

Answer 6

To help manage the risks the company may face - risks to the company’s objectives

Question 7

What is the sixth reason companies need to maintain a sound system of internal control?

Answer 7

To adhere to policies and plans

Question 8

What is the seventh reason companies need to maintain a sound system of internal control?

Answer 8

Legal requirement to be met (Companies Act 2006) e.g VAT to be properly accounted for

Question 9

What is the eight reason companies need to maintain a sound system of internal control?

Answer 9

Regulatory requirements eg CG Code - a list of things company must be complying with in addition to legal requirements, especially for larger PLCs