External and Internal Financial control

Internal and External Financial controlFinancial planning is emerging as a method and instrument of financial management, which represents foundation of the business, while financial control includes monitoring, testing, evaluation and realization of these plans. They are both subjects of study at online accounting degree programs. Here students learn about both aspect of financial control: external and internal.

Internal control is a set of measures taken by the management in terms of achieving the business goals. In the accounting degree program, these measures are defined and grouped as following: protection of property (assets) of excessive spending; ensuring reliability of accounting data; consistent implementation of policies in all parts of the company and evaluation of the sector performance, employees and managements’ performance. It can be divided into administrative and accounting control.

Fundamental task of internal control is informing and assuring the management that all parts of the company adhere to basics of the business plan and business policy in the analyzed period. Internal supervising must not be performed by one person from its beginning to the end in order to prevent abuse and fraud. Everyone in the organization is responsible for internal control: management, board of directors, internal auditors and other staff.

Internal control is carried out by the auditor through two phases: study and evaluation. In the study phase, the auditor obtains evidence using three forms: standard questionnaires for internal control, textual and schematical display. Then he makes an assessment based on collected data and prepares the reports.

External financial control can be preventive and subsequent.

In preventive control are acquired information not only about what kind of business activities should be done, in what way and at what time, but there are also possibilities in a case of negative reviews such actions to be prevented, or at already initiated actions to be suspended. Subsequent control, on the basis of obtained information, perceive disadvantages in establishing and implementation of financial policies in the past. Companies don’t leave their future development to disorganization, but strive to base it on good projecting (long, medium and short term). It is also a subject of study of accounting degree colleges, and consists of a series of material business plans as procurement, production, sales, human resources, imports, exports, domestic transport, investments, etc. Financial planning should synthesize and harmonize all kinds of tangible plans, to build a consistent financial integrity. Professionally and objectively constructed financial plan should represent a safe starting point for all kinds of projected financial activities in the company, which are quite complex.