INTERNAL CHECK
AUDITING

INTERNAL CHECK | OBJECTIVES & PRINCIPLES OF INTERNAL CHECK


What is Internal Check? An internal check is a part of internal control. It is concerned with staff duties so that a single person is not allowed to record every aspect of a transaction. The purpose is to prevent or disclose. errors and frauds/ One person automatically check the work of another person without duplication of work. It is a built-in-device to facilitate the work of business concern. There is no additional duty for an internal check. The work of one employee becomes dependent on another. The senior employee has powers to check the work of others. There is a need for complete harmony among the employees for doing their duties. The top-level management must be honest otherwise .internal  check cannot work properly, The effective internal check is desirable for large-scale business. In small business concern, it has no popularity due to less number of employees. There may be conflict among the workers. In this case, it has no utility at all. Anyhow it is essential for large concerns but it is a burden on small business.

DEFINITION OF INTERNAL CHECK 

Ronald A. Irish says that It refers to the organization of office duties in such a way as to prevent or disclose both errors and frauds.
L.R. Dickness says that It is an arrangement of book that error and frauds are likely to be prevented by the operation of the bookkeeping itself.
De Paula says that It means practically a continues internal audit carried on by the staff itself by means of which the work of each individual is independently checked by other members of the staff.

OBJECTIVES OF INTERNAL CHECK

  1. FRAUD PREVENTION: The purpose of the internal check is to frauds. The management can achieve this objective through the distribution of duties. One employee is allowed to perform one part of the others complete*the other parts. In this way, many hands complete the work
    2. ASSETS PROTECTION: The purpose of the internal check is to protect the assets. The management can take steps to safeguard the resources One person maintains the record and the custody are given to another officer. Top-level management makes the purchase and disposal. The assets are used for business purpose The periodical inspection of resources is necessary to avoid misuse of the resource.
    3. ERROR PREVENTION: The purpose of the internal check is to prevent errors. The management can devise such a system of internal that mistakes are prevented altogether. If there is negligence on the pan of one employee, it is pointed out by another employee who can check the person of the first person.
    4. FIXING RESPONSIBILITY: The purpose of the internal check is to fix the responsibility of employees. The division of duties helps the management to locate the inefficient employees.’ The pending work provides chances of errors and frauds. The management can replace employees who are negligent in their duties,
    5.  MORAL CHECK: The purpose of the internal check is to develop high moral values. The work of one employee is supervised and checked by another employee. Alt employees feel the sense of responsibility, They complete their work on daily basis. Thus the efficiency of workers increases.
  2. RECORDING FACTS: The purpose of the internal check is to record facts and figures in the books of accounts. The work of recording facts is divided among many employees, In this way, it is possible to prepare books of accounts, which can reflect the true and fair view of business work.
    7. ACCOUNTING SYSTEM: The purpose of the internal check is to devise proper accounting system, It consists of personnel, procedure, records, form and used by an organization in developing and communicating accounting information.

PRINCIPLES OF INTERNAL CHECK                      

  1. SUFFICIENT STAFF: The principle of internal check is sufficient staff, The employees can be appointed according to workload, The management can determine the amount of ‘work, which distributed among the departments. The persons are hired to perform their duties The overloading can create trouble for management.
    2. DIVISION OF WORK: Division of work is a principle of internal check. The management can determine the total amount of work. The whole work is divided among departments. The heads of such departments are responsible for completion of work according to a timetable.
    3. CO-ORDINATION: Co-ordination is a principle of internal check. All departmental managers are bound to coordinate with each other in order to achieve the objectives of the organization. When there is a fault in one department, the work other departments suffers and the objectives cannot be achieved. It determines the degree of coordination among the managers.
    4.  ROTATION OF DUTIES: Rotation of duties is a principle of internal check/ The workers bored by doing the same work from year to year. There is a need for rotation of duties. It is in the interest of the concern as well as the employee. The efficiency improves due to change in duties.
    5.  RECREATION LEAVE: The recreation leave is a principle of internal check. The employee can enjoy the recreation leave, It is necessary for the mental health of the employee, He cannot commit frauds as the new employee in his place can disclose the matter. The internal check system can work in the interest of the business, The weaknesses of one person are disclosed due to leave.
    6. AUTOMATIC MACHINES: The principle of internal check is that machines must be used to do accounting work if permissible. The machines Can do a lot of work without delay, The chances of frauds and errors are reduced to a minimum. The working of machines improves the efficiency of the accounting staff,
    7.  CHECKING: The principle of an internal check to check the work of other employees. Many’ persons perform the work. The officer can put his Signature to verify the work done by his subordinate. In this way one Work passes many hands, The chances of errors and frauds are minimized due to checking and counter-checking.
  1. SIMPLE: The principle of internal check is simple working: The employee can understand the working of the internal check system. A person can work under the supervision of other employees. The line of authority moves from top to bottom level. Alt workers can understand their duties in the organization.
    9. DOCUMENTS CLASSIFICATION: The classification of documents the principle of internal check. the business documents are prepared, collected recorded and placed in proper files. The index is prepared to compile data. The filing system as useful to place letters. In case of need, the documents can be traced quickly.
    10. DEPENDENT WORK: Dependent work is a principle of internal check. The work of one employee is dependent upon the others. One work passes through the hand of two or three persons till it is completed. The senior person checks the work of junior person, No person is, all In all, to start and complete the transaction,
    11. HARMONY: The principle of internal check is harmony among the employees and departments, The understanding is essential for business goals. The management is to achieve other social and national objectives. The harmony is the basis for the successful internal check.