Objectives of an Accounting System

Objectives of an Accounting System:  

An accounting system should be developed to meet the following objectives:

·         To record, classify and report on financial transactions.

·         To ensure that accounting is done in accordance with generally accepted accounting principles and procedures

·         To provide management and other stakeholders with information

·         To understand past performance and plan future direction

·         Understand various possible risks and their controls

·         Defining the reporting

·         To physically safeguard the organization’s assets i.e. to prevent fraud and other losses.

·         To ensure that the following basic internal control features exist:

o   Segregation of duties (i.e. physical control over assets must be separate from recording and operational functions.

o   Appropriate authorization of transactions

o   Internal checks and balances

o   Adequate management supervision

o   Regular and independent review by an external auditor