Internal Check
INTERNAL CHECK
i. INTERNAL CONTROL MEANING AND DEFINITION
THE COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ENGLAND AND WALES “ the whole system of control financial and otherwise, established by the management in order to carry on the business of the company in an orderly manner, safeguard its assets and secure as far as possible the accuracy and reliability of its records.” It is the whole system of controls established by the management for the proper conduct of the various activities of the business with the help of – Accounting control Quality control Work standard Budgetary control Periodic reporting Internal check Internal audit Policy appraisals Quantitative control
ii.
FUNDAMENTAL PRINCIPLES OF INTERNAL CONTROL
1. The work should be so divided between persons in such a way that the work done by one person is automatically checked by the other. 2. The collusion between one person doing a work and the other person doing work should be avoided. 3. The clerk in charge of journal shouldn’t have access to ledger or vice versa. 4. The work of the staff should be changed from time to time.
iii.
MEANING OF INTERNAL CHECK
The system is based on the principle of division of work or labour that is the performance of each individual in an organisation, is checked automatically, by another and the chances of occurrence of errors or those of their remaining undetected are greatly reduced. SPICER and PEGLER “internal check is an arrangement of staff duties whereby no one person is allowed to carry through and record every aspect of a transaction so that, without collusion between two or more persons, fraud is prevented and at the same time possibilities of errors are reduced to a minimum.”
Page 1
1. 2. 3. 4.
OBJECTS OF INTERNAL CHECK
To eliminate and detect the acts of fraud and error. To prevent the misappropriation of cash or goods. To exercise moral pressure over the staff members. Since the work is divided
i. INTERNAL CONTROL MEANING AND DEFINITION
THE COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ENGLAND AND WALES “ the whole system of control financial and otherwise, established by the management in order to carry on the business of the company in an orderly manner, safeguard its assets and secure as far as possible the accuracy and reliability of its records.” It is the whole system of controls established by the management for the proper conduct of the various activities of the business with the help of – Accounting control Quality control Work standard Budgetary control Periodic reporting Internal check Internal audit Policy appraisals Quantitative control
ii.
FUNDAMENTAL PRINCIPLES OF INTERNAL CONTROL
1. The work should be so divided between persons in such a way that the work done by one person is automatically checked by the other. 2. The collusion between one person doing a work and the other person doing work should be avoided. 3. The clerk in charge of journal shouldn’t have access to ledger or vice versa. 4. The work of the staff should be changed from time to time.
iii.
MEANING OF INTERNAL CHECK
The system is based on the principle of division of work or labour that is the performance of each individual in an organisation, is checked automatically, by another and the chances of occurrence of errors or those of their remaining undetected are greatly reduced. SPICER and PEGLER “internal check is an arrangement of staff duties whereby no one person is allowed to carry through and record every aspect of a transaction so that, without collusion between two or more persons, fraud is prevented and at the same time possibilities of errors are reduced to a minimum.”
Page 1
1. 2. 3. 4.
OBJECTS OF INTERNAL CHECK
To eliminate and detect the acts of fraud and error. To prevent the misappropriation of cash or goods. To exercise moral pressure over the staff members. Since the work is divided