A Member of the Board of Directors Has Just Returned

question 102

Essay

A member of the board of directors has just returned from a meeting with the external auditors concerning the company's internal controls. The director noticed that the auditors stressed the importance of cash control and wants you, the company controller, to explain internal controls for cash.
Required:
a. Define internal control and explain its purpose.
b. Identify at least four typical internal controls over cash.

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Definitions:

Consolidated Financial Statements

Financial statements that aggregate the financial position, results of operations, and cash flows of a parent company and its subsidiaries.

Parent's Control

Parent's control refers to the influence or authority that a parent company holds over its subsidiaries, managing or directing their operations and strategic decisions.

Subsidiaries

Subsidiaries are companies that are controlled by another company, known as the parent company, through majority ownership of shares.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.