Internal control is defined as a process that helps an organization achieve its objectives through effective and efficient operations, reliable financial reporting, and compliance with laws and regulations. The objectives of internal control include avoiding inefficiency, ensuring accurate books of accounts, and measuring how well business policies are implemented. Internal control is important for protecting assets, addressing financial statement assertions, and establishing company practices, though it has limitations such as collusion, human error, and management override. Internal checks are accounting procedures where routine transactions are handled by multiple employees to detect errors through cross-checking work. Criteria for good internal checks include dividing work, rotating jobs, authority levels, separating custody from recording duties, and accounting controls.
2. MEANING
Internal control as defined by accounting and auditing,
is a process for assuring of an organizations objectives
in operational effectiveness and efficiency, reliable
financial reporting, compliance with laws, regulations
and policies.
3. OBJECTIVES
To avoid inefficiency, wastage and fraud.
To attain the maximum accuracy and reliability in
maintaining the books of accounts.
To measures how far the policies of the business are
being implemented.
Protect organizations assets against their improper
expenditure.
5. LIMITATIONS
Collusion
Human Error
Management override
Missing segregations of duties
Incorrect Judgment
Failure to Train employee
6. INTERNAL CHECK
An accounting procedure where by routine
entries for transactions are handled by more than
one employee such a manner that a work of one
employee is automatically checked against the
work of another for detection of errors and
irregularities.
7. EVALUATE CRITERIA FOR GOOD
INTERNAL CHECK
Division Of Work
Job Roatatison
Authority Levels
Separation Of Custody And Recording
Accounting Controls
