Some charecteristics of an internal check system.

Division of work – a work job should be divided into small parts and every part of the job should be allotted to a different worker. No one person should be allowed to handle a complete job.

Work rotation – The job among the clerks should be rotated over a period of time so that no one should occupy one position for a long period of time. Holding the same position over a period of time gives that parson chances of manipulations and his errors may also remain undetected.

Delegation of authority – There should be clear-cut delegation of authority. Every worker should know that they should be allowed to work within the level of their authority.

Fixing the responsibilities – responsibilities of all the workers should also be fixed. They should know that they are responsible for a particular type of errors or frauds.

Separating custodian and record keeper – A person who is responsible of keeping custody of a particular asset should never be the person responsible to record transaction regarding it.

Relying on internal check system – Before starting an audit, auditor should examine the internal check system if it is present in the organization. If the check system is efficient, he can rely on it and depend on test checking for the completion of audit.

He should carefully examine the system and then work with caution, if on the other hand during the checking of the books of accounts some point come to his thoroughly, if he ignores those irregularities and later on errors and frauds remain undetected he may be held liable a good internal check system can reduce the extent of work that an auditor has to put for doing the audit but in no case it can reduce his liability. Ultimate responsibility remains with the auditor.

Therefore, it is up to him to decide that how efficient is the internal check system and to what extent he can rely on it he should make a decision and then he should decide the level of his checking.

Author: Vikash

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