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What is Accounting Control?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 February 2020
  • Copyright Protected:
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    Conjecture Corporation
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Accounting control is the collective term used to describe the various methods and processes that are utilized by a business to keep its financial records accurate and up to date. While these controls often include compliance with any laws and regulations that may apply in the jurisdiction where the business operates, the methods used may go above and beyond what is required by governmental agencies. The ultimate goal of any program of accounting control is to not only make sure that generally accepted accounting practices are followed, but also that any ancillary issues that could prevent the exercise of that degree of control is minimized.

One good example of accounting control has to do with limiting who has the authority to be actively involved in the preparation of financial reports and statements. Ideally, this means that only trained accounting professionals are allowed to manage the tasks needed to create accurate reports that provide full and unbiased disclosure. Using this approach helps to prevent anyone in the company who has a special interest in presenting his or her contributions to the business in the best possible light, possibly pushing factors that indicate the contrary into obscure areas of the final report. While input from all officers and managers may be helpful in preparing the report, the final responsibility rests with those who understand accounting principals and know how they should be applied to the data relevant to the accounting period under consideration.

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While accounting control does not automatically ensure that members of the accounting department will fully comply with generally accepted accounting principals, following this strategy does increase the chances that both the financial records of the business and any reports prepared using those records will be in full compliance. Ideally, the accounting team is not impacted by special interests from any other sector of the company operation and is focused on presenting the most realistic perspective on company finances that it possibly can. By limiting the input from sources outside the accounting department, the chances of achieving this goal are greatly enhanced.

The use of accounting control tends to minimize the chances for questionable or biased financial reports from emerging and being distributed to investors or circulated among the general public. The approach also tends to limit the use of questionable accounting practices that sometimes result in what is known as cookie-jar accounting or cooking the books. Since the accounting control focuses on presenting a complete, balanced, and accurate status on the current financial situation of the company, there is no real chance to distort the numbers and manipulate them into supporting a perception that is different from the actual performance of the company.

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