Internal check:
Internal check means that checks imposed on such a way on day to day transactions that work of one person is checked by other person automatically. In this way the chances of fraud and errors minimizes. Because the mistake made by one person is checked by the other.
Matters relating to allocation of powers, division of work and methods of recording transactions are included in the internal check.
Objectives:
· The frauds and mistakes of clerk may be prevented.
· To prevent the goods and cash peculation by keeping check on the receipts and delivery.
· To keep the record of all the business transactions.
Auditory’ duty:
Auditor’s position with regard to internal check is as under.
Expansion:
First of all an auditor should satisfy himself about the working of proper internal check/control system. He should examine carefully the system of internal check before deciding the scope of work he would do.
In case of satisfactory system:
If the auditor is satisfied about the effectiveness of internal control them he should check hire efficiency and its existence by checking various items from different places. After it he may pay more attention or care to other important parts of this work.
Unsatisfactory case:
If the auditor feels that internal control system is not satisfactory then he should check those accounts where errors are likely to exist. If the internal control system cannot conform or satisfy to the auditor the he should report the client in writing.
Some sections are inadequate:
If auditor feels that overall system is satisfactory but certain sections of the system appear to be inadequate then he should inform the client about the dangers. The auditors should also give suggestions that how weaknesses can be removed if he is asked by the client.
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