INTERNAL CHECK(IC)
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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