INTERNAL CONTROL OF AUDITING

1. INTERNALCONTROL

2. MEANING
An internal control is a procedure or policy put in place by
management to
 safeguard assets
promote accountability
increase efficiency and
stop fraudulent behavior.

3. DEFINITIONS
Internal control, as defined
by accounting and auditing, is a
process for assuring of an
organization's objectives in
operational effectiveness financia
l reporting, and compliance with
laws, regulations and policies. A
broad concept, internal control
involves everything that controls
risks to an organization.
In other words, an internal
control is a process put in place
to prevent employees from
stealing assets or committing
fraud

4. OBJECTIVES OF INTERNAL CONTROL
Following are the main objectives of internal control:
To prevent errors and frauds
To prenent the miss use of goods and cash
To keep an accurate records of all the business
transactions
Protect organisation assets against their improper
expenditures
Assure and accuracy debendability of all the financial
and operating informations

5. Internal Controls help to understand and mitigate
risks.
Internal Controls help to address financial statement
assertions.
Internal Controls help to prevent and detect fraud.
Internal controls help to prevent misstatement of
financial statements.
Internal controls help to establish company practices

6. LIMITATIONS OFINTERNAL CONTROL
Collusion.
Human error.
Management override.
Missing segregation of
duties.

7.  An accounting procedure whereby routine entries
for transactions are handled by more than one
employee in such a manner that the work of one
employee is automatically checked against the work
of another detection of errors and irregularities.

8. ELECTIVECRITERIAFORGOODINTERNALCHECK
 Division of Work
 Job rotation
 Authority levels
 Separation of custody and recording
 Accounting controls

9. Division of Work:
No one should be allowed to have right to perform the
work from origin to end.
Job rotation:
No individual clerk should be allowed to occupy a
particular area of operation for long.
Authority levels:
There must be clear cut authority levels for according
sanctions to various transactions.

10. Separation of custody and recording:
There needs to be effective control by way of separation
that the persons handling an asset cannot make entries for the
transactions without any counter check.
Accounting controls:
In order to ensure internal check with regard to recording
of transactions in accounting records various cross checks must
be introduced to ensure that the accounting records reflect
reliable information.

11. THANK YOU