Controlling the Financial Reporting System

Overview

It is vital that the information provided in the financial statements is consistent with the qualitative characteristics of financial information. One of these if 'faithful representation' which requires that information be free from error. It is therefore vital that controls are built into the financial reporting system to reduce the risk of error in the financial statements.

Two of the key controls are:

• preparing and reconciling control accounts, and
• preparing a trial balance.

Once these processes have been completed and any errors corrected the final financial statements can be prepared from the financial data.

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Tags:	control accounts;trial balance;errors