Importance of Internal Controls.
Internal control is like a brain in the human body. Internal check and internal audit are equal to six sense organs of human anatomy. Internal control like brain Issued plans, programs, procedures to be adhered in achieving organizational goals, internal check and internal audit like six sense organs ensure that all departments in the organization functions for the success and wisdom in the life of organization.
- Proper Division of Work: Internal check tends to scientific and systematic division of work among employees according to heir competency. It enhances employee satisfaction and contributes for organizational efficiency.
- Fixation of Responsibility: It is human tendency to claims credit and disowns responsibility. But internal check enables to fix responsibility easily on the concerned employees for any errors and frauds.
- Greater Efficiency of Staff: Appropriate division of work and moral pressure created on the employees leads to greater degree of efficiency.
- Increased Earning or Profits: Higher order of organizational performance contributes for increased profitability of business,
- Early Detection of Errors and Frauds: The very object of internal check is to prevent the errors and frauds. Even if any error is committed the very next employee without delay immediately detects it. No error is allowed to continue till the external auditor comes and detects errors by the end of the year.
- Prevention of Errors and Frauds: The moral check and in built mechanism of internal check. Where in the work of one person is complementary to another person prevents the possibility of errors and frauds unless two or more makes collusion.
- Early and Easy Preparation of Final Accounts: Internal check keeps accounts up to date and correct, every transaction is accurate and authentic an reliable. Ready information is available for preparation of final accounts.
- Truth and Accuracy of Accounts: Internal check aims to attain zero error accounting. Thus, accounting with internal check assures the accuracy and acceptability of accounting information.
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