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Essay on Transaction Processing and the Internal Control Process
Abstract
The purpose of this paper is to explain the transaction processing and internal control process. Initially in this paper I have explained the internal control process and its five components in detail and then transaction processing system is discussed. This paper is written in APA format.
Internal Control Process
To explain in simple terms internal control process is basically defined as a process which is designed to assure that the company is meeting all its goals and objectives. The factors which the internal control process verifies that should be functioning well within a company are the: effectiveness and efficiency of all the operations performed in an organization; secondly the reliability of the financial reporting (we all remember the case of Enron) and third that the company is in full compliance with the applicable laws and regulations. (Root, 2000)
Before moving on there are some points that I would like to focus on. Firstly everyone in a company should understand the idea that like all other major implementations, internal control process is the responsibility of every individual within an organization. This process is not only stuck with the finance department but every department has to mutually work on the benefits of the company and assist it in meetings its goals and objectives.
Effective internal control is a built-in part of the management process (i.e., plan, organize, direct, and control). Internal control keeps an organization on course toward its objectives and the achievement of its mission, and minimizes surprises along the way. Internal control promotes effectiveness and efficiency of operations, reduces the risk of asset loss, and helps to ensure compliance with laws and regulations. Internal control also ensures the reliability of financial reporting (i.e., all transactions are recorded and that all recorded transactions are real, properly valued, recorded on a timely basis, properly classified, and correctly summarized and posted). (Root, 2000)....
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