The Relationship Between Internal Control and Internal Check.

Internal Control

Scope: It comprises the whole system of Controls, financial or otherwise, established by the management for conduct of business. It includes internal check and internal audit besides other controls.

Objects: A system of internal control strives to achieve objectives such as adherence to policies and procedures laid down by the management, safeguarding of assets, prevention and detection of errors and frauds, accuracy and completeness of records and. timely preparation of reliable financial information.

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Flexibility: Internal control system is reviewed occasionally by the management in the light of changes within the organization, in the economic environment and suggestions of internal auditor and external auditor.

Example: Internal control with regards to credit sales in an organization would consist of internal check system, physical controls, authorization procedures and review.

Internal Check

Scope: It refers to a system of allocating duties among the staff in such a manner that every person records a different aspect of a transaction. It is narrower in scope.

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Objects:  Internal check system is designed to prevent errors and frauds and fixing responsibility and safeguarding assets. It is a part of internal control system.

Flexibility: Internal check once introduced in the business is generally stable for a certain period and hence, less flexible as compared to internal control system.

Example: Internal check system will comprise of allocation of functions among various departments sales department (for accepting customer order), credit (for credit approval); warehouse (for issue of merchandise), dispatch department (of dispatching goods) and finance or billing department (for billing customers).

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