INTERNAL CONTROL Internal control’ is meant not only as an internal check and internal audit but the whole system of controls, financial and otherwise, established by the management in order to carry out the affairs of the Business/Business in an orderly manner, to safeguard its assets and to secure, as far as possible the accuracy, reliability and timely preparation of its accounting records and financial statements.
The Elements of Internal Control
Plan of Business
There can be no effective internal control without an adequate Business plan. This involves the separation of the Business’s operations into appropriate divisions and sub-divisions, the appointment of persons to assume responsibility for each division, sub-division.
There can be no effective internal control without an adequate Business plan. This involves the separation of the Business’s operations into appropriate divisions and sub-divisions, the appointment of persons to assume responsibility for each division, sub-division,
There can be no effective internal control without an adequate Business plan. This involves the separation of the Business’s operations into appropriate divisions and sub-divisions, the appointment of persons to assume responsibility for each division, sub-division,
Authorization
On internal control’s principle, authority, and responsibility for custodianship and accountability should be divided among employees so that no single department or employee has complete control over any one transaction or group of similar transactions.
Recording and Custody Procedures
Internal control procedures are to ensure that the funds and property of the Company/organization are kept under proper custody and are not improperly applied, either by error or intent; that expenditures are incurred only after authorization and are properly accounted for, and that all income is properly and completely accounted for and received.
Managerial /Supervision Reviews
An important feature of effective internal control is that the management reviews, at regular and frequent intervals, the financial operation and position by means of monthly accounts and reports, operating summaries and other properties, financial and statistical information e.g. monthly monitors, where the attention is drawn to material variance and explanations thereof.
Special Review
In addition to regular reviews of this nature, Management or/and Finance Department may, from time to time, call for a special review of particular items such as cash donations, stocks, salary distribution, spot cash count and review of account books etc. Managerial supervision and review is an essential element and part of any effective internal control system.
Internal Audit
Internal audit is an appraisal activity and includes amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of the accounting and internal control system established by the management.
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