Tuesday, 20 September 2011

Write a note on the following terms 1. Internal audit 2. Internal Check 3. Internal control

Internal audit means a continuous critical review of financial and operating matters of a business. Internal audit is done by the internal staff, appointed particularly for the audit purpose. These are called internal auditors. In other words it means the audit of a business conducted by the business itself on a continuous basis.

Note :- Internal audit is a part of the whole system of internal control but not the necessary part of accounting system or internal check.

Objectives Of Internal Audit :-
Its objects may differ from business to business, but following are important objects of internal audit,
1. Internal audit removes the chances of fraud and errors.

2. It is very useful for the preparation of annual audit. So before the annual audit errors can be removed.

3. Internal audit ensures the management of the business that check and internal system of accounting is effective and properly implemented.

4. It also examines that all transactions are properly authorized.

Internal check means that checks imposed in such a way on a day to day transactions that work of one person is checked by the other person automatically in this way chance of fraud and error minimizes. Because the error mistake made by one person is detected by the other.
Following matters are included in the internal check.

1. Matters relating to allocation of powers.

2. Division of work.

3. Methods of recording transactions.

The whole system of business control organized by the management to carry on the business is called internal control. It includes,
1. Internal check.
2. Internal audit.
3. Other such forms of control.


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