The Importance of Internal Accounting

The Importance of Internal Accounting

Teresa Lucas

American InterContinental University

Abstract

As accountant manager for ABC Corporation, a decision of importance will be sent as a memo to the CEO as to why it is vital in hiring on another managerial accountant to focus on internal accounting. Internal accounting is necessary when a company has its future set on short and long term goals as well as better control of the cash flow which can prevent and handle situations of fraud. (Jane, 2011, April 28) These characteristics and objectives will be presented in the memo as well as the importance of this information regarding the company and our responsibility in following the code of ethics in the business.

Memo: The Importance of Internal Accounting

To: Mr. James Wright CEO of the ABC Corporation:

Ccc: Accounting Department Staff

Dear Mr. Wright, as senior manager of the accounting department, I am sending a brief memo explaining the importance of internal accounting within our company. As you know, it has been brought up that we need to hire another accounting manager to focus on the internal accounting within the firm.

First, it is important to bring up the objectives of an internal accounting system. These objectives include short and long term goals to ensure that the business accounting department can plan ahead for future financial projects. Within the internal accounting system, in regards to short term goals, these include payroll, keeping track of on all income sums and purchases, and preparing the monthly budget for each department. Long term objectives include producing and writing annual fiscal financial reports using the data from the annual fiscal period. (Jane, 2011, April 28)

By hiring a second accounting manager that would focus on these internal controls, this will aid in reducing possible errors or prevent fraudulency. With the control procedures we have in place within the accounting system, this will allow the manager to assist in regulating and streamline all functions within the accounting department including tracking deposits, monitor check handling, assess budgets, and financial statements on a continual basis. As you understand, as well as I do, the recordkeeping aspect of the business is of utmost importance. (Karimi, 2011, March 7)

Another good reason to hire on a second accountant manager is so that by having one that focuses on the internal accounting, we are ever more dedicated in following the code of ethics regarding the business. The code of ethics, concerning the accuracy of company records and recording state that the records,