Internal Control Key Terms

Learn the ABCs of accounting internal control
By Jennifer Ehlenfeldt, Freelance Writer Keeping your company running smoothly includes making sure your accounting practices are in sound working order. Some of the most expensive mistakes a company can make include not conducting routine internal control.
Internal control can find accounting mistakes before they cost you a fortune. Setting up a constant internal control program can be useful at audit time and on the off-chance you need to produce accounting records for legal action. Internal control can also detect potential fraud or solve issues that may be caused by not-so-honest employees.

Sarbanes-Oxley

The Sarbanes-Oxley Act of 2002 was created to oversee the accounting process of public companies and make sure the information is as uniform as possible.
Try:  Use the guide to the Sarbanes Oxley Act online to get a better understanding of how it affects your accounting and internal control.

Forensic accounting

Auditors use forensic accounting services such as tax analysis, royalty audits, record analysis and courtroom testimony to help with internal control. Forensic accounting is often used to prepare for court cases, but it can also be used to make sure all your records are being kept properly or to find any fraud that may be taking place.
Try:  Pannell Kerr Forster of Texas explains forensic accounting and the services it offers.

Public Company Accounting Oversight Board

The Public Company Accounting Oversight Board (PCAOB)was formed to watch over public company accounting and auditing. The board was designed to provide assistance in complying with the Sarbanes-Oxley Act.
Try:  Visit PCAOB to find out more about the nonprofit organization and how it can help a company with internal control.

Controls tests

Control tests are used to detect and prevent financial misstatements. They are designed around a company's operations as part of the internal control process.
Try:  The New York State Society of CPAs defines control tests as they relate to companies' accounting practices.

Specific and general control

Specific control procedures refer to management of accounting as it relates to a specific business task such as receipts or withdraws. General control is an environmental control that refers to the overall internal accounting control.
Try:  The glossary at the Activity Based Risk Evaluation Model of Auditing explains the difference between general and specific internal control.

Spot checks

Spot checks are an important part of internal-control accounting practices. Keeping all your employees honest and trustworthy should include unannounced spot checks to determine any errors or questionable activity.
Try:  The Microfinance Gateway explains how spot checks are valuable. Look under internal controls.