Use of Internal Control by the Management for the Evaluation of Information Contained in Annual Financial Statements

The internal control system is a permanent integrated process of the economic entity, conducted by senior managers, from managers of departments to employees. Its correlation with the accounting information should ensure the objectives proposed by the top management regarding analysis of the economic entity’s activity and communication with the decision makers of hierarchical structures. For this purpose, it is necessary to evaluate the risks in the area that generates and reports accounting information, and correct the deficiencies that may affect the design and operation of the internal control system. In practice, managers should pay attention to the pattern of exercising internal control on financial and accounting activity so to gather from the information presented in the annual financial statements the foundation for decision making process. Improvement of the internal financial control system leads to gathering accounting information that meets all the criteria of quality and a continuous adaptation and development that is consistent with the interests of the organization.