Internal Controls and Its Scope

Internal controls

Are certain checks and procedures, installed by the management, to prevent financial fraud or misappropriation of assets. In other words, the internal control system can be defined to be the policies, practices, procedures, and tools designed with the objective to:

(1) safeguard corporate assets,

(2) ensure the accuracy and reliability of data captured and information products,

(3) promote efficiency,

(4) measure compliance with corporate policies,

(5) measure compliance with regulations, and

(6) manage the negative events and effects from fraud, crime, and deleterious activities

Scope of Internal Control                                                                                            

Internal control is an essential pre-requisite for efficient and effective management of any organization and is, therefore, a fundamental ingredient for the successful operation of the business in modern days. In fact, an effective internal control system is a critical success factor for any organization in the long term. Scope of internal auditors/area of operations of internal audit are as under:-

1.     Reliability and integrity of financial and operating information: Internal auditors should review the reliability and integrity of financial and operating information and the means used to identify, measure, classify, and report such information.

2.     Compliance with laws, policies, plans, procedures, and regulations: Internal auditor should review the systems established to ensure compliance with those policies, plan and procedures, law, and regulations which could have a significant impact on operations and reports and should determine whether the organization is in compliance thereof.

3.     Safeguarding of Assets: Internal auditors should verify the existence of assets and should review the means of safeguarding assets.

4.     Economic and efficient use of resources: Internal auditor should ensure the economic and efficient use of resources available

5.     Accomplishing of established objectives and goals for operations: Internal auditor should review operation or programmes to ascertain whether results are consistent with established objectives and goals and whether the operations or programmes are being carried out as planned.

Buy Cost Audit Classes: https://www.conceptonlineclasses.com/course/costaudit-pdhardbook-jun2019

#InternalControlsandItsScope