Internal control refers to the design and utilization of all the means whereby management is enabled to effectively safeguard the company’s assets and to administer current operations and plan for the future.
The following are the main objectives of internal control structure:
- To ensure the orderly and efficient conduct of business.
- To ensure that transactions are executed in accordance with management’s general or specific authorization.
- To ensure that transactions are promptly and correctly recorded, in the appropriate accounts and in the accounting period in which executed, so as to permit preparation of financial information within a frame work of recognized accounting policies.
- To ensure that access to assets is permitted only in accordance with management’s authorization and recorded assets are compared with the existing assets at reasonable intervals and appropriate action is taken with regard to any differences.
- To ensure accountability for assets.
- To ensure adherence to policies of the entity.
- To ensure confidence to the users of information.
- To ensure timely corrective actions through feedback information.
- To prevent and detect errors and frauds.