Tag: characteristics

You are the manager of an accounting department and would like to hire another managerial accountant to focus on internal accounting. The chief executive officer (CEO) is not convinced that a managing accountant position is needed. Prepare a 2-page memo for the CEO on the following:�Explain the objectives and characteristics of an internal accounting system.�Include an explanation of the importance of this information to the company.�Include an explanation of ethics in business and the managerial accountant’s role in upholding the code of ethics. 

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Objectives and characteristics of an internal accounting system

Internal accounting system is a computerized system that governs financial records of a company. Internal accounting system has both short-term and long-term objective. Its short-term objective is to generate clients’ payroll automatically, preparing monthly financial records and easy track of information such as inventory records. On the other hand internal accounting system long-term objectives give a great importance to the company in question. One of internal accounting system objective is decision making of a company. Internal accounting system generates yearly financial records that aid the management in making sound and profitable decision for coming budget years. Another objective for internal accounting system is the efficiency and effectiveness of work in the company. Many internal accounting systems are tailored to integrate with the business system of operation, creating one platform where various employees can work efficiently minimizing movement from one office to another. Another internal accounting system objective is current and future planning of a company’s’ budget. The ability of the system to generate financial projections report, enable the company to object on future planning of the company. Internal accounting system characteristics are derived from its objectives. The timeliness of information is one of its characteristics and the ability to generate reports automatically. Internal accounting system keep history of records of transaction that occurred earlier in the company and it is able to summarize information required easily and faster.

 Importance internal accounting system to the company

Internal accounting system provides great importance and benefit to a company. With internal accounting system an organization is able to control its environment. Many companies are faced with dishonest employees and frauds. Internal accounting system has no space for dishonest employees and no room for errors. Internal accounting system ensures documentation of every financial transaction hence employees cannot commit fraud with the system. Another importance of internal accounting system to a company is risk assessment. With set objectives by the system, possible risks are identified early enough and avoided. The system also enables the company to monitor operations in the company easily and fast. The internal accounting system divide different tasks to different people and the management can be able to monitor their employees’ performance and companies operation using the system. Another important advantage of internal accounting system to a company is the effective flow of communication and information.

Ethics in business and the managerial accountant’s role in upholding the code of ethics

Ethics in business is a key. Without code of ethics a business would not run smoothly. Code of ethics entail employees maintains utmost integrity that is maintaining moral principles in place of work. Clients- employee confidentiality is part of code of ethics in a company. An employee is not supposed to relay a client’s information to a third party without the clients consent. Employee’s competence and credibility is also key point in a company’s code of ethics. Employees are required to be competent at all times………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. Characteristics of an internal accounting system

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