Internal Controls Internal controls in Textile Industry Advantages of internal controls Limitation of internal controls Suggestions and Conclusion

1. INTERNAL
CONTROLS
Department of Accounting
FACULTY OF MANAGEMENT AND
FINANCE
University of Colombo

2. Content
1.Introduction
2.Internal controls in Textile
Industry
3.Advantages of internal controls
4.Limitation of internal controls
5. Suggestions and Conclusion
2

3. INTRODUCTION
3

4. Internal controls includes a set of
rules, policies, and procedures an
organization implements to provide
reasonable assurance that:
• Financial reports are reliable
• Operations are effective and efficient
• Organisation activities comply with
applicable laws and regulations
4

5. 5
INTERNAL CONTROLS
IN
TEXTILE INDUSTRY

6. 6

7. RESPONSIBLE
PARTIES
7

8. EAM MALIBAN TEXTILE
Board of
Directors
Finance
Department
Production
Department
HR
Department
Finance
Manager
Production
Manager
HR
Manager
8

9. Selected Internal Controls
1. Budgets
2. Password protected Accounting
software
3. Payments authority control
4. Inventory management
5. Quality check points
6. Fingerprint System
9

10. INTERNAL
CONTROLS
10

11. Accountant’s view
“The main reason for having financial
controls is to reduce the risk of error
and fraud. If errors are made it is
likely to result in a loss of money,
without good controls we are unlikely
to have good records and therefore we
unable to highlight any errors.”
11

12. Implemented controls
1. Budgets
2. Password protected Accounting
software
3. Payments authority control
12

13. Production Manager’s view
13
“Inventory management and quality
check points are main function of the
production department. Therefore we
highly concern about smooth and
continue production process hence it
has a direct relationship to the
profitability of the our company.”

14. 4. Inventory management
Implemented controls
14

15. 5. Quality check points
15

16. “I’m deals with the employees of the
company. Employees are the most
valuable asset to any organisation.
Therefore it is my responsibility to
retain company employees.”
HR Manager’s view
16

17. 6. Fingerprint System
Implemented controls
17

18. ADVANTAGES
OF
INTERNAL CONTROLS
18

19. 1. Lean manufacturing system
• Increase production efficiency
• Effective responding
2. Fingerprint system
• Preventing attendance conflicts
• Time saving
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20. 3. Quality check points
• Reduce wastage and defects
• Increase the goodwill
4. Master budgeting
• Effective recourses allocation
• Can monitor and control all operations
20

21. LIMITATIONS
OF
INTERNAL CONTROLS
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22. Why internal controls
do not always work
1. Human Judgment
2. Management Override
3. Collusion
4. Weak internal controls
5. Breakdowns
22

23. SUGGESTIONS
23

24. Suggestions to Improve
Internal Controls
1. Use systematic controls
2. Decentralization of power
3. Direct Supervision
4. Establish proper mechanism
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25. CONCLUSION
25

26. QUESTIONS
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27. THE END
THANK YOU
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