Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

Explain the difference between Internal Control and Internal Check (5 Marks December 2009) Or
Distinguish between internal control and internal check (4 Marks, December 2003)
Answer:
Internal Control comprises whole system of controls, financial or otherwise established the management for the conduct of business. It includes internal check and internal audit besides other controls. But internal check refers to a system of allocating duties among the staff in such a manner that every person records a different aspect of a transaction. It is narrower in scope.

A system of internal control strives to achieve objectives such as adherence to policies and procedures laid down management, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of records and timely preparation of reliable financial information. On the other hand, internal check is designed to prevent frauds and errors and fixing responsibility and safeguarding the assets. It is a part of Internal Control system.

Internal Control system is reviewed occasionally the management in the light of changes within the organization, in the economic environment and suggestions of external and internal auditor. But Internal Check once introduced in the organization is generally stable for a certain period and, hence, less flexible as compared to the internal control system.



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