Whether you're a business professional aiming to optimize your company's financial operations or a student seeking comprehensive insights into Acumatica's accounting capabilities, this DLA 242 summary is your go-to resource. With clear explanations, practical examples, and a focus on the intricacie...
o Creditors = Suppliers, Trade Payables, Payables, Vendors
o Inventory = Stock
Dates
o Lessons refer to a year 202X which relates to the year you are completing the DLA course.
Internal Control
o The purpose of internal controls is to safeguard assets, promote operational efficiency, ensure accurate financial reporting and
facilitate compliance with laws, regulations and internal policies.
o In the context of AIS, the purpose of internal control is:
• Safeguard assets against unauthorised access, theft or misuse
• Ensure the validity, accuracy, completeness and reliability of financial information.
• Promote operational efficiency and effectiveness.
• Ensure compliance with laws, regulations and internal policies.
• Identify and manage risks effectively.
• Detect and prevent errors, fraud and irregularities.
o Key components of internal control in AIS include:
• Control environment
Sets the tone for the organisation, emphasising the importance of internal control and ethical behaviour.
Includes factors such as management’s commitment to integrity and ethical values, the organisation structure,
assignment of responsibilities and the overall attitude towards control and accountability.
• Risk assessment
Involves identifying and evaluating the risks that could impact the achievement of business objectives and the
integrity of financial information.
, This process enables organisations to prioritise controls and allocate resources effectively.
Examples: errors, fraud, unauthorised access, system failures or compliance violations
• Control activities
Specific policies, procedures and practices implemented to mitigate identified risks.
These controls can be preventative, detective or corrective.
Examples: Segregation of Duties, Access controls, transaction approvals, reconciliations and regular monitoring
and review of the processes.
• Information and communication
Internal control relies on effective information and communication systems to ensure that relevant financial
information is captured, processed and communicated accurately.
This includes the proper design and implementation of accounting systems, clear documentation of policies and
procedures, timely and accurate financial reporting and communication of control responsibilities and
expectations to employees.
• Monitoring
Involves the ongoing assessment and evaluation of the effectiveness of internal controls.
Ensures the controls are operating as intended and any deficiencies are identified and promptly addressed.
Activities may include periodic internal audits, management reviews, data analysis and feedback mechanisms.
o Internal controls encompass a set of measures designed to provide reasonable assurance that business objectives are achieved,
financial, reports are accurate, and operations comply with rules and regulations.
o Effective internal control in accounting information systems assures stakeholders (management, shareholders, auditors and
regulatory bodies) that financial information is reliable, and the organisation's operations are conducted in a controlled and
ethicalmanner.
General vs. Application Controls
o Two distinct types of controls that serve different purposes and operate at different levels within a business IT system. They work in
tandem to safeguard the company's IT infrastructure and AIS, ensuring layered security and maintaining the integrity of financial
information.
• General controls
Overreaching controls that apply to overall IT resources and data of which the AIS is part.
Encompass protecting the underlying hardware, operating systems, and network infrastructure.
It further includes access controls, change management processes, backup and recovery procedures, physical
security measures, comment network security and IT governance frameworks.
• Application controls
Governs Ann monitors the operations and daughter processing within a specific software application or system.
These controls are tailored to the functionality and requirements of the specific application and aim to achieve
specific control objectives.
Within the context of an AIS The control objectives are safeguarding data entry (input), processing of
transactions(processing) and financial information (output).
This assures the output's ultimate validity, accuracy and completeness.
Application controls encompass a variety of measures designed to prevent, detect and correct errors or
irregularities within distinct accounting processes.
Examples: Validation cheques or logical programmable controls on data entry fields, Segregation of duties,
transaction authorization workflows, formalised error handling and correction processes and automated
reconciliations.
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