Internal Control
Internal control is the plan of organization and all of the coordinated methods and procedures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to the prescribed managerial policies. We can say that internal control is a broad term with a wide coverage. Its scope extends beyond those matters which related directly to the functions of accounting and financial departments.
Previously internal check and control was taken as the same term but nowadays owners and managers are separate and different. So, it is taken as a separate term. Internal control incorporates inspection, internal audit and other factors of control. Nowadays, it is essential for the smooth operation of accounting, cash and other transactions of business.
Advantages Of Internal Control
Application of internal control provides the following benefits to the various parties:
1. Internal control helps to protect the assets of the business from misuse, theft, accident etc.
2. Internal control helps to implement management policies to attain corporate goals.
3. Internal control helps the auditor in his/her work detecting all the errors and frauds which are committed in the books of accounts.
4. Internal control helps to increase the accuracy and reliability of financial statement and books of accounts.
5. Internal control helps to regulate the work of staffs through division of work among the staffs in a scientific manner which helps to make the daily works of staffs effective.
6. Internal control helps the management to prepare and implement effective plans by providing correct and fact information.
7. Internal control helps to put moral pressure on staffs.
