At the peak of the hierarchy of internal controls sits policies. Policies are written by the highest echelon of management for a company, its Board of Directors or Trustees. The upper tier and mid level management of a business develop procedures to carry out the policies of the company.
Accounting is the measurement of economic activity and encompasses the gathering of information, classifying the data, entering the data into a database (most often an accounting software), generating reports for management and finally interpreting the outputs.
Just as manufacturing uses controls to ensure quality of product, controls are used in accounting to generate accurate information, maintain security over assets and comply with Generally Accepted Accounting Standards. The company implements various controls to assure accurate and timely information.
Cafeteria plans, a.k.a. Section 125 plans, are employer sponsored benefit packages that allow employees to choose from a menu of options and allocate their allotted share to the items they pick. With this type of plan the employer agrees to an allowance per employee to contribute to the package. The employee may either take the allowance as additional cash income (fully taxed) or allocate the amount among the various benefit options.
For the longest time the retirement benefit was the most important employee benefit to offer. Today it is number two behind health insurance which is mandated by law. Still, it is a sought after benefit by employees and an excellent recruitment and retention tool for employers. There are two broad groups of retirement plans.
After three decades of discussion, in-fighting and wrangling, Congress passed a health insurance mandate along party lines of vote. This health insurance mandate changed the rules for employers and affects the accounting department and in particular, the proper bookkeeping for the respective amounts paid by both the employer and employee.