From the course: Accounting Foundations: Internal Controls
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Internal controls and management credibility
From the course: Accounting Foundations: Internal Controls
Internal controls and management credibility
- An important fact often forgotten by financial statement preparers and users is that the entire purpose of accounting is to lower the cost of doing business. - [Kay] A good internal managerial accounting system allows managers more efficient access to the information needed to make good business decisions. - [Jim] Good external financial accounting reduces the information uncertainty surrounding a company so that external parties, such as lenders and investors, do not bear as much risk when they provide financing to the company. - How do managers get information they can rely on? How can those outside a company rely on the information provided by the company? - Effective internal controls increase the confidence that users can have in the information that is produced and provided. Better decisions are made when there is confidence in the data upon which those decisions are based. - One of the disappointing lessons stemming…
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