An internal control system comprises the whole network of systems established in an organisation to provide reasonable assurance that organisational objectives will be achieved.
It is the process which is designed, implemented and maintained by management and those charged with governance.
When the business is small, all the operations are done by the owner and few employees but when the business grows and become large, business have to define a systems and procedures so that all the employees have to work according to that and operations runs smoothly. And these systems and procedures are called an Internal Control as per my opinion.
An internal control system comprises the whole network of systems established in an organisation to provide reasonable assurance that organisational objectives will be achieved.
It is the process which is designed, implemented and maintained by management and those charged with governance.
Internal control is seen to apply to three aspects of the business:
(1) Effectiveness and efficiency of operations – that is the basic business objectives including performance goals and safeguarding resources.
(2) Reliability of financial reporting – including the preparation of any published financial information.
(3) Compliance with applicable laws and regulations to which the company is subject.
Have you ever gone to any shop where you have to first go to the Cash counter and collect the bill and then only the salesman will give you your goods?
It is one kind of System and procedure where the goods will not be delivered without showing the bill. And here the Billing counter is separate and delivery of goods will be done by separate person, which will prevent the happening of fraud.
People think that Internal Control system is for preventing fraud and errors only, no it helps business to run its operation systematically and smoothly
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