Paper I, Part C: Accounting and Auditing: Internal Control
Internal Control:
Internal control comprises of the plan of the organisation and all the coordinate methods and measures adopted within a business to safeguard its measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data to promote operational efficiency and to encourage adherence to prescribed managerial policies.
Characteristics of Internal control:
CROSS-ASIA ( Mnemonics)
C —– Competent and trustworthy personnel
R —– Records, Financial and other organisation Plan
O —— Organisational Plans
S —– Segregation of duties
S —— Supervision
A —– Authorisation
S—- Sound Practice
I—- Internal Audit
A—- Arithmetic and Accounting Controls
Scope of Internal Control:
- Safeguard misappropriation
- Control over sale and purchase
- Financial control
- Deciding Employees’ remuneration
- Deciding capital expenditure and to keep a eye on it.
- To control inventory
- To control investment.
Objectives of internal control:
- Safeguard its assets
- Check the reliability of its accounting data
- To promote operational efficiency
- To encourage adherence to prescribed managerial policies.
Expected questions:
- What is Internal control?( 2 marker/5 marker)
- Scope of Internal Control.
- Features of Internal control
- Objectives of Internal control.