According to American Institute of Certified Public Accountants (AlCPA) Internal controls system includes a set of rules, policies, and procedures an organization implements to provide direction, increase efficiency and strengthen adherence to policies
The internal control environment relates to:
– Management’s overall style in encouraging awareness of the need for good controls, for example.
– The existence of organisational controls such as review of the payroll an independent person such as the managing director, and the rotation of payroll duties amongst staff responsible for processing it – this helps achieve all of the objectives set out above.
– Segregation of duties and supervisory controls to avoid the misappropriation of cash and to avoid fraudulent collusion to create, for example, dummy employees or to make inflated payments – this prevents the loss of assets and/or inaccurate records
Objective of Internal Control
• To minimize, if not completely eliminate, wastage and inefficiencies in
business operations and to safeguard the assets of the business.
• To ensure high degree of accuracy and reliability of procurement data
and promote operational efficiency.
• To measure how far the policies of the management are being
• To evaluate the efficiency of performance in all aspects of business activities and to highlight the weaknesses