BOP Program Statement 8510.02 § 27

and cost accounting systems design includes requirements for

adequate control over assets, liabilities, revenues, costs, and

expenses. The design must be predicated upon accrual basis

accounting with revenues, costs, and expenses charged to periods

of usage, such as the cost of capital assets allocated to periods

during which their use produces revenues.

Properly completed forms, reports, and analyses of the cost

accounting system provide an additional internal control feature

in that operating results are further summarized by specific jobs

PS 8510.02

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or processes. Pre-determined standards are established for each

job or process and must be compared subsequently with actual

costs upon completion. Such comparisons will disclose variances.

Analysis and evaluation of significant variances should identify

the causes of any breakdown in internal controls. Cost

accounting provides the detailed information for this purpose.

Corrective action can then be taken to prevent recurrence.

Audit trails are essential to good system design. Entries for

all transactions should be traceable from the originating

document to financial report data. Similarly, total amounts in

financial reports should be traceable back through the General

Ledger accounts and original entry of source documents.