Explain the internal control. What are the main features of internal control.

What do you understand by internal control? What are its objectives? How will you evaluate the internal control ?

Ans.

INTERNAL CONTROL

According to W.W. Bigg. “Internal control is best regarded as indicating the whole system of controls, financial and otherwise established by the management in the conduct of a business including internal check, internal audit and other forms of control.”

Internal controls has been defined as being not only internal check and internal audit but the whole system of controls, financial and otherwise established by the management in order to carry on the business of the company in orderly manner safeguard its assets and secure as far as possible the accuracy and reliability of its records.”

According to Spicer and Pegler. “Internal control is best regarded as indicating the whole system of control, financial and otherwise established by the management the conduct of a business, including internal check internal audit and other forms of control.”

According the H. Sefttler, “Internal check and internal audit comprise the principal means by which business management internal maintain control over the extensive activities and operation for which it is responsible.”

According to the statement on standard accounting practices 6 (SAP6). “The system of internal control is the plan of organization and all the methods and procedures adopted by the management and entity (enterprise) to assist in achieving management’s objectives of ensuring as far as practicable, the orderly and efficient conduct of the business.”

IAG6 of the International and auditing practices committee of the International Federation of Accountants, New York defines the system of internal control as, “The plan of organization and all the methods and procedures adopted by the management of an entity (organization) to assist in achieving managements objectives of ensuring as for as practicable the orderly and efficient conduct of its business, including adherence to management policies, the safeguarding of assets, the prevention and detection of fraud and error the accuracy and completeness of the accounting records and timely preparation of reliable financial information. The system of internal control extends beyond these matters which relate directly to the functions of the accounting system. The individuals elements of the system of internal control are referred to as internal controls and are collectively known as internal control.