no discripyion required

1. INTERNAL
CONTROL
Facilitator: SN Mdletshe

2. Need for internal
control
• In a business losses may occur due to
theft, damage and errors. As a result a
business needs to have various procedures
in place so that checks take place on a daily
basis.
2

3. WHAT IS INTERNAL CONTROL
3

4. Internal Control
• Internal control is the
systems or procedures that
are put in place to monitor
various activities in the
business so that any losses
are reduced or avoided
altogether.
• At the end of the day,
however, all goals have one
aim, to safeguard our
belongings, whether it is
cash, stock, vehicles or
equipment so that the
business can operate at
maximum efficiency.
4

6. WHAT IS THE PURPOSE OF INTERNAL CONTROL
• WHAT IS THE PURPOSE OF INTERNAL CONTROL
•
• To identify areas where the accepted procedure is not being carried out.
• An example of this is when the cashier who is operating the cash register is expected to lock the cash
•
• So that management can see when time and resources are being wasted.
• In a manufacturing concern internal control will identify if materials are being wasted during the manufacturing process.
•
• To safeguard assets.
• These are measures put in place to prevent assets from being stolen, lost or damaged e.g. locking our vehicles away in a garage
overnight.
•
• To find errors.
• Internal control procedures can identify if we are being overcharged by the bank or creditor.
•
• To expose fraud.
• This is theft committed by somebody within the business environment. Internal control can for instance detect if an employee wrote
out a company cheque for his own use.
6

7. Accounting Controls
• The following are some of the Accounting controls that can be put in place.
•
 Duties are assigned to employees in such a way that everybody knows who is responsible and
accountable for various activities
•
• . e.g. the cashier is responsible for the cash received at her cash register.
•
 All transactions should be properly recorded. The duties of recording should be divided between
different people. In this way it gives one person less opportunity for theft from the business.
•
 Cash received should be deposited daily so that large amounts of cash are not kept on the
premises.
•
 Changes in procedure must be authorised by senior management.
•
 Documents must be pre-numbered so that any every document can be accounted for.
7

8. The following security measures could be put in place:-
 Storerooms should have locks with keys being available only to authorised people.
•
 Large amounts of cash could be transported by a security company.
•
 Cash registers should be kept in a safe area away from the exits to the business.
 Computers should be kept in rooms where only authorised people have access. All authorised
people should have their on password for the computer system.
•
 The business should have a register for all assets. Regular checks on the assets and ensure that
all assets on the register can be accounted for.
•
 Security measures such as cameras or security guards could be introduced in order to prevent
shoplifting.
•
• Gate control for all vehicles entering and leaving the premises
8

9. Shoplifting
9

10. Damage of stock
10