Friday, March 14, 2014


The term internal check implies that the work of various members of the staff is allocated in such a way that the work done by one person is automatically checked by another. It is defined as “such an arrangement of book keeping routine where in errors and frauds are likely to be prevented or discovered by the very occupation of book keeping itself’.

Internal check is a system under which accounting methods and details of an establishment are laid out that the accounts and procedures are not under the absolute and independent control of any one person or the contrary the work of one employee is complementary to that of another.

The system of IC is based upon the principle of division of labor, where in performance of each individual is automatically checked by another. This is possible by properly allocation the work and integration of function of the employees in such a manner their work complements each others.

Objectives of Internal Check

1. Assigning Responsibility: To allocate the duties and responsibilities of every employee in such a manner that they may be identified and held responsible for a particular error or fraud.

2. Minimising Error or Fraud: To minimise the possibility of any error or fraud done by any staff member.

3. Detecting Errors or Frauds: To detect errors or frauds easily due to independent checking of work done by one employee by another employee.

4. Reducing Clerical Mistakes: To minimise the possibility of omission of any transaction from being recorded in the books of accounts.

5. Enhancing Work Efficiency: To enhance the efficiency of the staff, as the management of duties is based on the principle of division of labour.

Principles of Internal Check
1. Sufficient Staff: The principle of internal check is sufficient staff. The employees can be appointed according to the workload. The management can determine the amount of work, which is distributes among the departments. The persons are hired to perform their duties. The overloading can creates trouble for management.

2. Division of Work:  Division of work is a principle of internal check. The management can determine the total amount of work. The whole work is divided among departments. The heads of such department are responsible for completion of work according to timetable.

3. Co-Ordination: Coordination is a principle of internal check. All departmental managers are bound to coordinates with other in order to achieve organization objectives. When there is fault in one department, the work of other department suffers. The objectives cannot be achieved. Internal check determines the degree of coordination among the managers.

4. Rotation of Duties: Rotation of duties is a principle of internal check. The workers feel bore by doing the same work from year to year. There is a need of rotation of duties. It is in the interest of concern as well as employees. The efficiency is improved due to changes is duties.

5. Responsibility: The responsibility is a principle of internal check. The employee can enjoy recreation leave. It is necessary for mental health. He can enjoy recreation leave. It is necessary for mental health. He cannot commit fraud as the new employee in his place can disclose the matter. There internal check system can work in the interest of business. The weakness in of one person is disclosed due to leave.

6. Checking: The principle of internal check is to check the work of other employees. Many persons perform the work. The officers can put his signatures to verify the work done by his subordinate. In this way one work passes many hands. The changes of error and fraud are minimized due to checking and counter checking.

7. Simple: The principle of internal check is simples in working the employees can understand the working of internal check system. A person can work under the supervision of other employees. The line of authority moves from top to bottom level. All workers can understand their duties in the organization.

8. Documents Classification: The classification of documents is the principles of internal check. The business documents are prepared, collected, recorded and placed in proper files. The index is prepared to compile the data. The filing system is useful to place the latter. In case of need the documents are traced at once.

9. Dependent Work: Dependent work is a principle of internal check. The work of one employee is dependent upon others. One work passes in the hand of two or three persons till it is complete. Another person checks the passes done by one person. No person is all in all to start and complete the transactions.

10. Harmony: The principles of internal check are harmony among the employees and departments. The understanding is essential for business goals. The management is to achieve other social and national objectives. The harmony is basis for successful internal check.


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