THE EVALUATION OF ACCOUNTING CONTROL SYSTEM IN NIGERIA
American institution of certified public accountants (AICPA) defined accounting control system as the plan of organizations to adopt within the business, accounting control to safeguard assets, check the accuracy and reliability of it’s accounting data many define it as the whole financial system and ensuring accuracy control system in the financials of an organization.
[widget id=”related-posts-by-taxonomy-2″]
Accounting system is a system which comprises all the purposes of protecting it’s resources against waste, fraud and inefficiency with the system.
A system of accounting and record keeping will not succeed in completely and accurately processing all transactions unless controls know as internal control are built with the system. The purpose of such internal control to accounting systems are: –
- To ensure all transaction are recorded.
- Errors and irregularities are avoided
iii. Assets and liabilities are recorded at their correct amount
- THE NEED FOR ACCOUNTING CONTROL
In Nigeria, there is no legal provisions as to the establishment of accounting system by an organization. If the business is to be carried out in an orderly manner, ensure adherence to accounting policies, safeguard it’s assets and secure as far as possible the completeness and reliability of records, there would be need for an accounting control system which is not only sound principle but effective in it’s operation. Accounting system are not just established for the sake of having one. They have to be carefully monitored for the purpose of a carrying on the business transaction in an orderly and efficient manner.
The need for accounting control system is not applicable only in manual system, it is also required in an electronic system.
Necessary to review the system in a computerized accounting control because in manual system data processing activities are carried out separately. A system of accounting ad record keeping will not succeed unless controls known as internal controls are built into the system. The purpose of such internal controls are: –
- To ensure all transactions are recorded
- Errors or regularities are avoided.
- Liabilities ad assets are recorded at this correct amount. In a nutshell, accounting control system in a computer system will be of utmost importance in order to ensure that assets are safe, that there is physical security over the computer.
- ESTABLISHMENT OF ACCOUNTING CONTROL
According to Howard L.R “the responsibility for the establishment of the accounting system rest entirely with the management, the author may from his own experience and knowledge of the organization help and advise but he has no authority to demand that certain rules and procedures should be carried out. It is recognized however, that auditors normally give their advice and assistance to management who will find it to their advantage as made.
However, any accounting system established by management should give a clean demonstration between responsibilities and duties of member or staff.
Financial and other wise would include the use of control accounts and otherwise may include physical access restrictions to computer terminals established by the management internal control system either directly or by means of external consultant. Internal auditors may be asked to advise on the setting of system. There should be a function carried out by independent person on that no person or department have a transaction from the beginning to the end. He who authorize should not record and he who has custody of an asset should not maintain accounting record for the asset.
- COMPONENTS OF ACCOUNTING SYSTEM
The components of accounting system or control are internal check and internal audit.
- INTERNAL CHECK
This is the aggregate of the checks and balance imposed on day to day transaction on an organization where by the work of one person is verified dependently by or is complimentary to the work of another.
The objective being the prevention or early detection of errors an fraud. It is the responsibility of management to determine the nature of the organization and the worth of it’s assets in order to set up an adequate system of internal check
- INTERNAL AUDIT
On accounting control system, the internal auditor and independent review and appraisal with an organization by the specially assigned staff of that organization of the accounting financial and all other operations of the organization. Internal and external auditor operate legally in the same field and they have: –
- common interest
- fundamental difference
- similarities
COMMON INTEREST
They have common interest in ascertaining that there is an effective system of internal check to detect errors and fraud. An adequate accounting system to provide the information necessary for preparing true and fair financial statement.
- FINANCIAL DIFFERENCE
Although they have common interest, here are however some difference in cope the extent of the work undertake by the internal auditor is determined by the management information system, the external auditor is primarily concerned with the truth and fairness of the accounts.
Not withstanding three important difference, the work of both the internal auditor and the independents auditors on accounting matters is carried out largely by similar means namely: –
- The extermination of the system of internal control for both soundness in principle and effectiveness in operation.
- The verification of assets and liabilities.
- The examination and checking of accounting record statements.
The important points to note about accounting system by internal auditors are that internal auditors is undertaken by the organization specially assigned staff for this purpose, most organization have an internal auditors.
Management can appoint any person considered capable to perform the duties of internal auditing. Powers and responsibilities are vested in management, the internal auditors will carryout duty by the authority of the management.
[simple-links category=”3202″]
