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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JANURAY 2011
VOL 2, NO 9
8.2.1 Internal Accounting Control
Internal accounting control is protective in nature in that its procedures, measures, and
controls prelude occurrence of errors and mistakes in accounting data and procedures. Internal
accounting control was defined by Standard Audit Association No1 (SAS NO1) as
organizational plan and related procedures and methods aiming at assets protection and
checking accuracy of accounting data used in the accounting books (Al-Saban, 1996).
8.2.2 Internal Administrative Control
The organizational plan includes coordinating methods and procedures aiming at accomplish
greatest level of productive efficiency, encourage compliance with administrative policies and
decisions. Statistical statements, time-motion studies, performance reports, quality control,
estimated budgets, standard costing, using graphical charts and various training programs are
some of the methods used to achieve goals of internal administrative control. However,
internal administrative control indirectly relates to both accounting and financial records
(Jum'ah, 2005).
8.2.3 Internal Check
Internal check includes the organizational plan and different coordinating measures and
procedures aiming at keep safe of enterprise assets from embezzlement, loss, or misuse. To be
effective, internal check depends on division of labor with self-control where the job done by
each employee is checked by workmate who is involved in performing the job; and also
depends on identification of authorities, powers and responsibilities (Boockholdt, J. & Li,
David).
9. Development Aspects of Internal Control at Jordanian Commercial Banks:
The concept of internal control has developed with the development of accounting systems.
With the growth in size of economic entities, mass production, proliferation in number of
bank owners, increased numbers of employees and introduction of modern machines in an
entity there appeared a need to establish effective internal control on employees, machines and
processes ensuring best practice and compliance with clearly defined business rules and
guidelines .
The aspects of development in internal control field (Christopher, 1999) include -:
Control environment i.e. policies, procedures and attitudes of senior managers, members of
Board of Directors, and owners of entity regarding significance of the control .
Risk anticipation i.e. identifying and analyzing risks involved in financial statement
preparation process based on established accounting principles .
Control activities, policies and procedures adopted by the management to achieve the intended
goals from financial reporting, reasonable separation among duties, proper licensing of
financial processes, activities, records, and documents, and eventual control on assets, books,
and independence check on performance .
Information and delivery i.e. methods used to identify, collect, classify, record, and reporting
financial processes of entity while take responsibility on its assets. This means accomplishing
goals associating with review of the financial processes in terms of existence, accuracy,
classification, timing, posting, and summation .
Monitoring, which means ongoing estimation by managers of quality of internal control
performed and identify whether control was implemented as planned or if were deviation is
there a need to modify internal control .
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 371