A well designed internal control should ensure five objectives:
- Accountability and comparison
- Proper recording. Under proper recording, completeness is a paramount. It ensures that transactions are not omitted from the accounting records. The valuation part of proper recording deals with the assurance that transactions are recorded at the actual amounts at which they occurred. In addition it considers, proper classification, affecting the accounts that should be affected by each transaction, and timing of transactions which should be recorded in the accounting period in which they occurred.
- Protection and limited access
Transactions' cycles include:
Cost Allocations Cycle
Property Control Cycle
Cash and Investments Management Cycle
Budget Management Cycle
Debt Management Cycle
Financial Reporting Cycle.
The key factors thay should be analyzed when determining the level of risk include: Volume of transactions, procedures in place, authorization process, and prior ocurrences. Minimizing the risk of fraud is achieved through tasks such as identification of primary responsibilities and functions as they relate to internal control, identification of transactions, cycles, and accounting information systems, which are crucial to the achievement of the enterprise's objectives, and identification of obstacles and risks to the organization's financial processing and information systems.