Management planning and control system - Essay Example

So as to avert the frauds and errors, the modern business world has developed some potential tools. These tools include accounting techniques and control systems such as internal check system. According to Macintosh “accounting and control systems can and do play a critical role in defining the moral constitution of an organisation” (1994, p.174). In order to better understand this statement, it is essential to evaluate control systems and accounting techniques separately. This paper will evaluate the efficacy of such tools in defining the ethical status of an organization.

Impacts of control systems on organization In the opinion of Basu (2009, p. 4.13), internal check can be defined as an arrangement of staff duties whereby no person is allowed to deal with the entire process of a transaction. As a result of this practice, every record is checked by several persons so as to ensure the accuracy of the book of accounts. This method would also assist the organisation to detect errors and frauds that already committed by accounting clerks. Since employees are not permitted to deal with a transaction from beginning to end, their unfair practices would be detected in subsequent checks if they have committed any.

When such a practice is being exercised in an organisation, the employees will be very cautious about the fair maintenance of accounts. This careful account preparation minimises the elements of errors to a large extent. At the same time, the fear about detection of frauds and thereby compulsory job termination would persuade employees to treat organisational documents genuinely. Nowadays, majority organisations practice this type of internal control system in order to increase the reliability of their financial information.

In short, control systems and thereby the feeling of being discovered would aid the organisation to exercise moral pressure over its employees. Impacts of accounting on organization If control systems are employed to put a check to errors and frauds, the accounting procedures mainly propose to identify elements have already been committed. At the same time, it must be noted that control techniques are part of a well formulated accounting system. According to American Institute of Certified Public Accountants (AICPA), accounting is defined as “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof” (as cited in Jon, 2008).

Although, the basic components of accounting such as journalising and posting are carried out in a day to day manner, the final accounts are prepared at the end of the financial year. The final financial statement provides the state of affairs of the business, and on the strength of this report; it is possible to verify the book balances with actual business status. If any difference is identified between book value and actual value, the concerned accounting clerks are held liable to compensate the detected damages.

This procedure also puts some moral pressure over employees to keep the accounts accurately and sincerely. In the opinion of Roy (n.d.), forensic accounting is the recently introduced branch of accounting that can be effectively employed to deal with errors and frauds. Under this system, the firms treat all