Why controls matter in a set of books
A control is a routine check that stops a mistake or finds it early. See what one unchecked error costs.
Task 1Errors, fraud and controls3 questions
At Rowan Joinery, Priya keeps the books and Dan Rowan owns the business. Books can go wrong in two ways.
- Error
- a mistake nobody meant to make
- Fraud
- something done on purpose, to take money or to hide the truth
A control is a routine check that stops a problem, or finds it soon after.
- Reconciliation
- two records of the same thing are compared
- Authorisation
- a named person approves a payment or a journal before it happens
- Segregation of duties
- one transaction is shared between people, so that no one person handles all of it
- Physical controls
- locks, safes and passwords
Task 2What one unchecked mistake costs3 questions
Task 3Stopping a problem, or finding it3 questions