Original Question: (Do not reply to this one)
With the concepts of responsible stewardship and integrity in mind respond to the following questions.
·What are management’s incentives for establishing and maintaining strong internal control?
·What are the auditor’s main concerns with internal control?
Student Discussions:
Reply to each student posts by commenting about their posts and building on the subject (About 100 words each) APA reference.
APA reference.
1-Kelci Lewis
According to the text, internal controls "allow management to focus on operations and financial performance goals while maintaining compliance with relevant laws and minimizing surprises" (Messier, Glover, & Prawitt, XXXXXXXXXXNot only are internal controls critical for management, but auditors as well because it assures that assets and records are safeguarded and shows the reliability of the accounting information system. Accountants are the trusted ones and are expected to be honest, just, and consistent in word and deed, therefore they must act accordingly when handling the financials of a company to ensure information is not misrepresented and accurately recorded for decision making purposes. Without internal controls, it could lead to management making improper decisions regarding product pricing and profits. If the financials are misstated, it could cause potential investors to make the wrong decisions as well. Ensuring that information is accurately reported is key to the success of any business. Whether in business or your personal life, it is imperative to ensure you encompass the characteristics of responsible stewardship and integrity, which means optimizing your resources and being honest. Those in the profession understand the importance, especially those interpreting the financial statements.
References:
Messier, W. F., Glover, S. M., & Prawitt, D. F XXXXXXXXXXAuditing & Assurance Services: A Systematic Approach (10th ed.). New York: McGraw-Hill/Irwin.
2-Shirley Stenbak
There are many reasons for management establishing and maintaining a strong internal control environment. A strong control environment is one that sets the cultural and ethical tone throughout the entire organization. These reasons include setting the boundaries for ethical behavior through the organization and this behavior should reach from the top to the bottom of the organization. In order for these goals to have merit, it is important for internal controls to have consequences when individuals operate outside the boundaries set forth in the ethical standards. Anyone from the highest manager to the lowest level employee should be held accountable when they perform outside those boundaries (Messier, Glover, & Prawitt, 2017).
Internal controls and this commitment to ethics and integrity can have many positive effects on the organization including attracting and retaining talented individuals who hold the same values and goals of the organization. In the long run, this can lead to lower hiring and training costs, saving the organization money. Strong internal controls can also have a positive effect on the reliability and transparency of the financial statements. This can lead to a stronger sense of trust when it comes to the financial statements and with shareholders and auditors. Not only can it build trust within and without the organization, it can also increase the effectiveness of evaluating and correcting internal control weaknesses as they are discovered.
Messier, W. F., Glover, S. M., & Prawitt, D. F XXXXXXXXXXAuditing & assurance services: A systematic
approach (10th ed.). New York: McGraw-Hill/Irwin. ISBN: XXXXXXXXXX