1、毕 业 设 计（论 文）外 文 参 考 资 料 及 译 文译文题目： 内部控制透视：理论与概念 说明：要求学生结合毕业设计（论文）课题参阅一篇以上的外文资料，并翻译至少一万印刷符（或译出 3 千汉字）以上的译文。译文原则上要求打印（如手写，一律用 400 字方格稿纸书写） ，连同学校提供的统一封面及英文原文装订，于毕业设计（论文）工作开始后 2 周内完成，作为成绩考核的一部分。A Clear Look at Internal Controls: Theory and ConceptsHammed Arad (Philae)Department of accounting, Islamic Az
2、ad University, Hamadan, IranBarak Jamshedy NavidFaculty Member of Islamic Azad University, Kerman-shah, IranFrom：Reserarch Paper,July 2009.Social Science Research NetworkAbstractInternal control is an accounting procedure or system designed to promote efficiency or assure the implementation of a pol
3、icy or safeguard assets or avoid fraud and error. Internal Control is a major part of managing an organization. It comprises the plans, methods, and procedures used to meet missions, goals, and objectives and, in doing so, support performance-based management. Internal Control which is equal with ma
4、nagement control helps managers achieve desired results through effective stewardship of resources. Internal controls should reduce the risks associated with undetected errors or irregularities,but designing and establishing effective internal controls is not a simple task and cannot be accomplished
5、 through a short set of quick fixes. In this paper the concepts of internal controls and different aspects of internal controls are discussed.Keywords:Internal Control,Management Controls,Control Environment, Control Activities, Monitoring.1. IntroductionThe necessity of control in new variable busi
6、ness environment is not latent for any person and management as a response factor for stockholders and another should implement a great control over his/her organization. Control is the activity of managing or exerting control over something.The emergence and development of systematic thoughts in re
7、cent decade required a new attention to business resource and control over this wealth.One of the hot topic a bout controls over business resource is analyzing the cost-benefit of each control.Internal Controls serve as the first line of defense in safeguarding assets and preventing and detecting er
8、rors and fraud. We can say Internal control is a whole system of controls financial and otherwise,established by the management for the smooth running of business; it includes internal cheek, internal audit and other forms of controls.2.COSO describe Internal Control as follow Internal controls are
9、the methods employed to help ensure the achievement of an objective. In accounting and organizational theory, Internal control is defined as a process effected by an organizations structure, work and authority flows, people and management information systems, designed to help the organization accomp
10、lish specific goals or objectives. It is a means by which an organizations resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organizations resources, both physical (e.g., machinery and property) and intangible (e.g., repu
11、tation or intellectual property such as trademarks). At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction
12、level, internal control refers to the actions taken to achieve a specific objective (e.g., how to ensure the organizations payments to third parties are for valid services rendered.) Internal control procedures reduce process variation, leading to more predictable outcomes. Internal controls within
13、business entities are called also business controls. They are tools used by managers everyday.* Writing procedures to encourage compliance,locking your office to discourage theft,and reviewing your monthly statement of account to verify transactions are common internal controls employed to achieve s
14、pecific objectives.All managers use internal controls to help assure that their units operate according to plan,and the methods they use-policies, procedures,organizational design,and physical barriers-constitute.Internal control is a combination of the following：(1). Financial controls(2). Other co
15、ntrolsAccording to the institute of chartered accountants of India internal control is the plan of organization and all the methods and procedures adopted by the management of an entity to assist in achieving management objective of ensuring as far as possible the orderly and efficient conduct of it
16、s business including adherence to management policies, the safe guarding of assets prevention and detection of frauds and error the accuracy and completeness of the accounting records and timely preparation of reliable financial information,the system of internal control extends beyond those matters
17、 which relate to the function of accounting system. In other words internal control system of controls lay down by the management for the smooth running of the business for the accomplishment of its objects. These controls can be divided in two parts i.e. financial control and other controls.3.Finan
18、cial controls:(1) Controls for recording accounting transactions properly.(2)Controls for proper safe guarding company assets like cash stock bank debtor etc(3) Early detection and prevention of errors and frauds.(4)Properly and timely preparation of financial records like balance sheet and profit a
19、nd loss account.(5) To maximize profit and minimize cost.4.Other controls: Other controls include the following:(1)Quality controls.(2)Control over raw materials.(3)Control over finished products.(4)Marketing control, etc5. Parties responsible for and affected by internal controlWhile all of an orga
20、nizations people are an integral part of internal control, certain parties merit special mention. These include management, the board of directors (including the audit committee), internal auditors, and external auditors.The primary responsibility for the development and maintenance of internal cont
21、rol rests with an organizations management. With increased significance placed on the control environment, the focus of internal control has changed from policies and procedures to an overriding philosophy and operating style within the organization. Emphasis on these intangible aspects highlights t
22、he importance of top managements involvement in the internal control system. If internal control is not a priority for management, then it will not be one for people within the organization either.As an indication of managements responsibility, top management at a publicly owned organization will in
23、clude in the organizations annual financial report to the shareholders a statement indicating that management has established a system of internal control that management believes is effective. The statement may also provide specific details about the organizations internal control system.Internal c
24、ontrol must be evaluated in order to provide management with some assurance regarding its effectiveness. Internal control evaluation involves everything management does to control the organization in the effort to achieve its objectives. Internal control would be judged as effective if its component
25、s are present and function effectively for operations, financial reporting, and compliance. he boards of directors and its audit committee have responsibility for making sure the internal control system within the organization is adequate. This responsibility includes determining the extent to which
26、 internal controls are evaluated. Two parties involved in the evaluation of internal control are the organizations internal auditors and their external auditors.Internal auditors responsibilities typically include ensuring the adequacy of the system of internal control, the reliability of data, and
27、the efficient use of the organizations resources. Internal auditors identify control problems and develop solutions for improving and strengthening internal controls. Internal auditors are concerned with the entire range of an organizations internal controls, including operational, financial, and co
28、mpliance controls.Internal control will also be evaluated by the external auditors. External auditors assess the effectiveness of internal control within an organization to plan the financial statement audit. In contrast to internal auditors, external auditors focus primarily on controls that affect
29、 financial reporting. External auditors have a responsibility to report internal control weaknesses (as well as reportable conditions about internal control) to the audit committee of the board of directors.6. Limitations of an Entitys Internal ControlInternal control, no matter how well designed an
30、d operated, can provide only reasonable assurance of achieving an entitys control objectives. The likelihood of achievement is affected by limitations inherent to internal control. These include the realities that human judgment in decision-making can be faulty and that breakdowns in internal contro
31、l can occur because of human failures such as simple errors or mistakes. For example, errors may occur in designing, Maintaining, or monitoring automated controls. If an entitys IT personnel do not completely understand how an order entry system processes sales transactions, they may erroneously des
32、ign changes to the system to process sales for a new line of products. On the other hand, such changes may be correctly designed but misunderstood by individuals who translate the design into program code. Errors also may occur in the use of information produced by IT. For example, automated control
33、s may be designed to report transactions over a specified dollar limit for management review, but individuals responsible for conducting the review may not understand the purpose of such reports and, accordingly, may fail to review them or investigate unusual items.Additionally, controls, whether ma
34、nual or automated, can be circumvented by the collusion of two or more people or inappropriate management override of internal control. For example, management may enter into side agreements with customers that alter the terms and conditions of the entitys standard sales contract in ways that would
35、preclude revenue recognition. Also, edit routines in a software program that are designed to identify and report transactions that exceed specified credit limits may be overridden or disabled.Internal control is influenced by the quantitative and qualitative estimates and judgments made by managemen
36、t in evaluating the cost-benefit relationship of an entitys internal control. The cost of an entitys internal control should not exceed the benefits that are expected to be derived. Although the cost-benefit relationship is a primary criterion that should be considered in designing internal control,
37、 the precise measurement of costs and benefits usually is not possible.Custom, culture, and the corporate governance system may inhibit fraud, but they are not absolute deterrents. An effective control environment, too, may help reduce the risk of fraud. For example, an effective board of directors,
38、 audit committee, and internal audit function may constrain improper conduct by management. Alternatively, the control environment may reduce the effectiveness of other components. For example, when the nature of management incentives increases the risk of material misstatement of financial statemen
39、ts, the effectiveness of control activities may be reduced.7. Balancing Risk and ControlRisk is the probability that an event or action will adversely affect the organization. The primary categories of risk are errors, omissions, delay and fraud In order to achieve goals and objectives, management n
40、eeds to effectively balance risks and controls. Therefore, control procedures need to be developed so that they decrease risk to a level where management can accept the exposure to that risk. By performing this balancing act “reasonable assurance” can be attained. As it relates to financial and comp
41、liance goals, being out of balance can cause the following problems:Excessive controls Excessive controlsLoss of assets, donor or grants Increased bureaucracyPoor business decisions Reduced productivitynoncompliance Increased complexityIncreased regulations Increased cycle timePublic scandals Increa
42、sed of no-value activitiesIn order to achieve a balance between risk and controls, internal controls should be proactive, value-added, and cost-effective and address exposure to risk.8. ConclusionThe concept of internal control and its aspects in any organization is so important, therefore understan
43、ding the components and standards of internal controls should be attend by management. Internal Control is a major part of managing an organization. Internal control is an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or av
44、oid fraud and error. According to custom definition, Internal Control is a process affected by an entitys board of directors, management and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories namely. The major factors of inter
45、nal control are Control environment, Risk assessment, Control activities, Information and communication, Monitoring. This article reviews the main standards and principles of internal control and described the relevant concepts of internal control for all type of company.References1Brian Ballou, Dan
46、 L Heitger.A Building - Block Approachfor Implementing COSOs Enterprise RiskManagement-Integrated.Framework.Management Accounting Quarterly, Winter 2005.2Tranki, Frank J, Steinberg, Richard M.Internal Control-Integrated Framework: A landmark study.The CPA Journal, Jun 1993.3May, Robert L.COSO - Inte
47、rnal Control: Committee ofSponsoring Organizations of the Tread Way Commission.ManagementAccounting, Mar 1993, Vol.74.4 Chicken JC, Posner T. The philosophy ofrisk M . London: Thomas Telford, 1998.5 HW Snider. Risk management: A retrospectiveview J . Risk Management, 1990, ( 04) .6 Sarbanes-Oxley Act,20027 Committee of Sponsoring Organizations of the Treadway Commission (COSO)，InternalControl-Integrated Framework,19928 Flint D. Philosophy and Principles of AuditingM. Macmillan Education Ltd, 1988.9IRM,AIRMIC,ALARM.ARiskManagementStandardS.2002,http:/.
