The whole system of controls; financial, administrative, operational and otherwise, established by management to ensure that the finances, assets and all resources of the organization are properly kept. The controls must be respected or adhered to in conformity with organizational policies and the GAAP.

1. Eelo University Faculty
of Management
science
Strong Internal Controls
Principles of Auditing
Chapter - 5

2. Definition of internal controls
The whole system of controls; financial,
administrative, operational and otherwise,
established by management to ensure that the
finances, assets and all resources of the
organization are properly kept. The controls
must be respected or adhered to in conformity
with organizational policies and the GAAP.
Generally accepted accounting principles.

3. ORDASSICA
1. ORGANIZATIONAL PLAN/CHART/STRUCTURE
2. RECORD KEEPING
3. DIVISION/SEGREGATION OF DUTIES
4. AUTHORIZATION OF EXPENDITURE
5. SAFEGUARD OF ASSETS
6. SUPERVISION OF STAFF
7. INTERNAL CHECK
8. COMPETENCE OF STAFF
9. ARITHMETIC CORRECTNESS

4. ORGANIZATIONAL PLAN/CHART/STRUCTURE
This explains the chain of
command and gives the reporting
procedures in an organization. It
tells who in which position and
who are under his control
(subordinates/assistants).

5. RECORD KEEPING
All organization’s data most be
properly recorded and stored by
responsible officials. All classified files
and documents must have security
keys. There should be both soft and
hard copies for documents. It is
advisable to have a software back-up
as well, E.g hard disc.

6. Continuation… record keeping
INFORMATION SYSTEMS
Good strong controls must
include data center, system
software acquisition and
maintenance, security access,
and system development and
maintenance.

7. DIVISION/SEGREGATION OF DUTIES
Duties are segregated to reduce the risk of error or
inappropriate action.
Normally the responsibilities of the following should be
separated:
 Initiating, approving, & recording transactions
 Handling the related assets
 Reconciling balances
 Reviewing reports
One person cannot steal and conceal.

8. AUTHORIZATION OF EXPENDITURE
All expenditures and other organization
transactions must be approved and authorized
by responsible officials.
Management authorizes activities and
transactions within limited considerations.
Management specifies when prior supervisory
approval is needed.
A supervisor’s approval implies that he/she
verified conformance with policies and
procedures.

9. EELO UNIVERSITY
GENERAL PAYMENT VOUCHER
Serial number Date
Please pay Mr. Buyera Saidi
Amount in figures $300 (amount in
words: Three hundred dollars)
Reason
Being cash for 3 days travel allowance to
Addis Ababa research conference

10. AUTHORIZATION & APPROVAL
ACTIVITY NAME POSITION SIGNATURE DATE
Prepared by Mubarak Accountant Mubarak 27th /2/2020
Approved
by
Suad Dean Suad 29/2/2020
Authorized
by
Abdullahi Vice
chancellor
Abdullahi 29/2/2020
Paid by Ahmed Cashier Ahmed 29/2/2020
Checked by Muamin Auditor Muamin 29/2/2020

11. SAFEGUARD OF ASSETS
Organizational assets should be in the custody
of responsible officials. For example the
organization vehicles ought to with qualified
drivers and driven with strict instructions. After
official work all cars must be parked in the
premises of the organization. There should be
recommended service maintenance of the
organization assets.

12. SUPERVISION OF STAFF
Staff need to be supervised. Every
staff should be supervised by a more
senior official. Staff should adhere to
the set procedures of operations in
the organization.

13. INTERNAL CHECK
Internal check ensures that the work of every
individual official is automatically checked by
another responsible official. For example, the
negotiation about the price of a good is done
by the sales clerk, the receipt is issued by a
cashier, the journal entries made by an
accounts clerk, and transfers to the cash book
by the chief cashier, a ledger posted by the
accountant, a trial balance be a senior
accountant, income statement by the principal
accountant and finally the balance sheet by
the chief accountant.

14. COMPETENCE OF STAFF
All staff must be qualified for the jobs
they do. Employees not meeting the
required performance levels ought to
be taken for further training to match
their jobs. There should be set
qualifications for each position. More
qualified and experienced employees
should be given more challenging
duties.

15. ARITHMETIC CORRECTNESS
All calculations need to be correct.
Add and re-add to be sure of the
figures. Check additions, divisions
and subtractions and ensure they
give correct totals. Wrong
calculations can lead to untold losses
to the organization.

16. THANK YOU FOR BEING PART OF
THE GREAT PROFESSION
“VIVA ACCOUNTANTS &
AUDITORS”
© Eelo university
Buyera Saidi – PhD Research - (Agribusiness)
Director research & innovations