An internal check is a part of internal control. The purpose of Internal Check is to prevent or minimize the possibilities of errors, frauds or irregularities.
Common Features of Internal Check System
Certain qualities are needed to make an internal check system more effective and efficient. Such qualities are known as features of internal check system which are as follows:
- Responsibility:
Responsibility of each individual must be properly defined and fixed. The work of the business should be allocated amongst various clerks in such a manner that their duties and responsibilities are clearly and judiciously divided.
- Division Of Work
Before applying a test check it is necessary to divide the entire tasks among the staffs in such a way so that work can be checked automatically by another staff. Like, when staff takes the responsibility of purchase, then another staff should make its payment.
- Provision of Check
The system should be reviewed from time to time to introduce improvements. Strict supervision should be exercised to ensure that the prescribed internal checks and procedures are fully operative. An organization should set up such provision so that work can be checked by another staff. An officer can check the work of one staff by transferring to the staffs and again.
- Rotation of employees:
A good system of internal check should not allow person having custody of assets to have access to the books of account. A system of transfer or rotation of employees from one seat of work to another must be followed by the business.
- Self-balancing System
An organization can use self-balancing ledger accounts which helps to make the work of internal check easier. One person should be entrusted with the similar nature of work. It is necessary for efficiency and specialization. Its effectiveness depends on its management.
- Change In Work
Transfer or rotation of employees from one seat to another must be followed under good system of internal control. An organization needs to transfer the staffs from one place to another place so that the work of previous staffs can be checked by the later staff which helps to make the internal check system effective.
- Specialization
Every staff may not have such specialized knowledge to maintain accounts properly. Interviews with customers, suppliers and other visitors by responsible officials only. So, an organization should give the training to increase their skill so that internal check can be made more effective.
- Control
Careful handling of incoming mail with special attention to remittances and complaints from customers and others. There is more chance of frauds where there is direct contact of consumer or public. So, a manager can keep eyes in those works so that internal check system can be made more effectively.
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