The inner economic control – conceptual bases, algorithm and meaning at modern stage

For the successful activity of the firm, the increase of the profitability level, saving and the augmentation of assets, and the well-adjusted management mechanism (the most important element of which the daily internal control is) are necessary. The firm management bears the responsibility for the development and actual performance of the internal control system. All depends on it in order for the system to correspond the sizes and specifics of the firm’s activity, to function regularly and efficiently.

During forming the efficient system of the internal control, the administration has to provide:

· The trustworthy information is necessary for the successful management of the firm’s activity;

· The safety of assets and documents – means avoiding the facts of stealing, spoiling and is not the aimed usage of property, deleting or disclosure of information (including the contained in account records, and computer databases);

· The efficiency of economic activity – means if the exception by the way of controlling procedures of duplicating, unproductive expenses, the irrational usage of all the types of resources, optimization of tax payments, and strengthening of payment discipline;

· The correspondence of all prescribed accounting principles – is the obligatory performance by all employees of the set instructions and rules, and also is the normative acts at the firm;

· The provision of the trustworthy system of bookkeeping accounting.

The system of the internal control of the firm includes three main elements:

1) The environment of control,

2) The accounting system,

3) The procedures of control.

Each element infers the existence of rules, methods, positions and documentation, developed for achieving the indicated above aims. Combined altogether, the elements of the control system provide reducing risk for the firm in the business and financial activities, and as well in the bookkeeping accounting.

The environment control is the set of actions, activities and procedures that depicts the general attitude of the administration and owners of the firm to control, and the level of control importance to the company. If the higher management understands the importance of control and realizes this understanding in the manner of some exact practical actions, then, the other employees will accordingly perform the prescribed to them rules and instructions. While evaluating the environment of control, the following elements may be driven:

· Style and main managing principles that are depicted in the attitude of the administration for many elements of activity;

· The organizational structure that determines the existing forms of power and submission at the firm, regulates the spheres of authorities and responsibilities of employees, the order of making the reports;

· The distribution of authorities and responsibilities is determined to guarantee the proper conduction of economic operations;

· The managing methods of control that include the qualification of employees, the evaluations of the processing information system and making the reports, the analysis of the achieved results of financial activity and their comparison with the planned ones, the study of separate departments and etc.;

· The work with the personnel, with aim of having the necessary quantity of employees, which have the sufficient knowledge and experience to perform their duties,;

· The impact of outer factors that, as a rule, is not being the object of control from the side of the administration, but as well that may influence on the company’s work.

The accounting system – is the combination of procedures by collection, registration, processing and presentation of data about assets and economic operations of the firm. The efficient system of bookkeeping accounting provides the completeness, actuality, timeliness to display economic operations, their correct evaluation, classification and generalization.

To understand the accounting system of the firm, the study and evaluation of the following data of its economic activity, it is necessary to have:

· The accounting policy and main principles of the bookkeeping accounting;

· The organizational structure of the department, that is being responsible for the bookkeeping accounting and preparation of the accounting reporting (bookkeeping);

· The distribution of obligations and authorities among the employees of the bookkeeping department;

· The organization of preparation, turnover and saving the documents that depict economic operations;

· The order of depicting economic operations in the accounting registers, the forms and methods for generalizing of these registers;

· The order of preparing the bookkeeping accounting basing on the data of the bookkeeping accounting;

· The role and the place of computing techniques in providing the accounting and preparation of the reporting;

· The critical spheres of accounting, where the risk of error occurs or the distortion of the bookkeeping reporting is especially high;

· The means of control, determined in the separate areas of the accounting system.

Conceptually, the accounting system stands separately from the control procedures. But practically, this is hard to divide the investment of each element to achieve the aims of control. That is why the acceptability of the control procedures depends much on the state of the bookkeeping accounting system (the selected accounting policy, used means of processing data, the level of accounting computer programs, the volume of economic operations, etc.).

The control procedures – are the methods and rules, developed by the administration in order to have the sureness in the fact that all the done economic operations have been registered completely and exactly; all errors in the process of conducting affairs and registering data by them have been revealed to the most quickly; the completeness of data is provided by accounting registers or computer files; the access to assets and related to them documents is limited. This means that the control procedures give the sureness in the fact that the control aims, that provide the completeness, accuracy, legality, protection of assets and data files, will be achieved and the trustworthy financial information will be released.

Practically, various control procedures are realized: completeness of data, accuracy of data, permits (sanctions) of operations, the preservation of assets and registers, inner economic checks.

The control procedures of data completeness are determined for the sureness of the fact that the data by all the economic operations have been entered to the accounting registers and accepted for their processing. By their absence, the possibility of losing documents, their incorrect sorting, and thus, the incorrect registration of data by economic operations, exists.

The procedures of controlling the data accuracy are necessary to be sure that the data by each economic operation are displayed in the report on time and in the whole volume, and correctly distributed by accounts. The accuracy is achieved by the way of implementation of the control procedures, by the calculation of results, the general value, additions and classifications of accounts.

The control procedures of permits (sanctions) for operations are directed to provide the legality of operations.

The control procedures of assets’ and registers’ safety are based on limiting the access to assets of the company by the persons that have not authorization for this, cautions for steals, deletion or harming the assets.

The inner economic checks mean the thorough and continuous view at performing the previous control procedures; promote the timely reveal of errors; aim employees at the qualified performance of their obligations.