4 INTERNAL CONTROL
In business control is required for optimum utilizatiion of resources and for maximising the profits.business operations are carried on with the help of human agents and equipments.both require supervision to ensure that tasks assigned to them are carried out properly to avoid wastes and losses. Internal control required for small business is not identical with that required for a large business in the sense that in case of the former,the entire control is centralised with the owner and there may not be significant delegation of duties.as and when the business grows in size.it will reach a stage where the owner can no longer keep himself informed about the detailed operations of the business which will compel him to go for decentralisation of control.hence he has to employ more people for carrying on the business systematically and has to specify the tasks for each person.he should also ensure that the equipment and facilities are properly maintained.therfore a form of organization is required,from which he would be able to know the details of work involved and the persons responsible for such work. Concept Of Internal Control
According to SA-400(now stands withdrawn)”Risk assessments and internal control” internal control system means”all policies and procedures adopted by the management of an entity to assist in achieving management’s objective of ensuring,as far as practicable,the orderly and efficient concept of its business including arence to management policies,the safeguarding of assets,the prevention and detection of fraud and and error,the accuracy and completeness of accounting records,and the timely preparation of reliable financial information.”the internal audit function constitutes a separate component of internal control with the objective of determining whether other internal controls are well designed and properly operated. [Now SA 400 had been withdrawn & SA 315 “Identifying And Assessing The...
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