Internal controls - Internal controls may be system, method...

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Internal controls may be system, method or procedure to carry on activity. It helps management in safeguarding assets; prevent leakage of revenues and effective utilization of resources. It helps interaction and coordination of two departments of an organization. As the internal controls are defined in advance, therefore it helps in avoiding disputes among employees. As it is written form therefore it may be used as evidence at the time of dispute. It an activity is not carried on as desired, at that time internal control may identify who is responsible for the error. It is not possible to say that due to internal control there will be no fraud, but it will reduce the risk of fraud that may happen. Internal control may be developed for any activity. But some of the areas which require good control, like cash receipts and payments, sales and collection, inventory management, fixed assets etc. For fixed assets the advance capital budgets are made. If the purchase cost of a fixed assets increase by certain percentage it requires approval by the board of directors. Rate of depreciation and method of depreciation are predetermined. All repairs and maintenance and
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Internal controls - Internal controls may be system, method...

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