Revision notes/ quick bytes

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:

  1. Safeguard misappropriation
  2. Control over sale and purchase
  3. Financial control
  4. Deciding Employees’ remuneration
  5. Deciding capital expenditure and to keep a eye on it.
  6. To control inventory
  7. 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:

  1. What is Internal control?( 2 marker/5 marker)
  2. Scope of Internal Control.
  3. Features of Internal control
  4. Objectives of Internal control.