Internal control

            INTERNAL CONTROL FUNCTIONS AND OBJECTIVES.
             Internal control comprises the plan of organisation and all co-ordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.
             OBJECTIVES OF INTERNAL CONTROL.
             COMPLETENSE.
             All valid transactions should be recorded and client's procedures must provide control to prevent the omission of transactions from the records.
             VALIDITY.
             -Recorded transactions are valid and system protects against the inclusion of non-existent transactions in journals and other accounting records.
             -Transactions are properly authorised and if transaction is not authorised it could result in a fraudental transaction.
             ACCURACY.
             -Transactions are properly valued and recorded and the system protects against errors in calculation and recording transactions.
             -Transactions are properly classified according to the clients chart of accounts.
             -Transactions are recorded at the proper time and as near as possible to the time of transaction.
             -Transactions are properly included in subsidiary records and correctly summarised and posted to general ledger.
             These internal control objectives should applied to all the major transactions in the audit.
             To achieve the objectives of a satisfactory system of internal control some general characteristics may be identified.
             Proper segregation of functional responsibilities.
             A system of authorisation, recording and adequate procedures to provide accounting control of assets, liabilities, revenues and expenses.
             Sound practices in the performance of duties and functions by each of the organisational department.
             Procedures to ensure that person have capabilities commensurate with responsibilities.
             FRAUD AND ERROR.
             Since auditor has to rely on judgment with regard to the areas to be tested and the number of transactions to be examined there is always possibility that some material misstatements in the accounts, resulting from fraud or error will not be detected.