Question

1 - explain the three important concept for Internal control in auditing

Answer 1

Solution: 1. An organization operating in competitive economic business market, need to built strong reliable relationship with customers,stockholders and government. It needs to operate in alliance with federal and state laws to meet its set objective along with social impact in society.

Three important concept for internal control in auditing are enlisted below:

a)Internal control is done in organization to regulate organization's activities and financial transaction records in accordance with set rules and regulations, and help achieve environment control. It is a continuous process of maintaining organization's activities in compliance with ethics and assurance.

b)An organization intends to maximize profit which in turn, requires minimizing risk and uncertainties. A true picture of effective management lies in determining courses of action to ignore unfavorable future situations in course of organizational operation. Internal control helps in identifying, interpreting and analyzing any unwanted factor and facilitates decision making.

c)Major part of internal control encircles collection of information, analyzing and turning unfavorable conditions to favorable for organization, by monitoring,interpreting,and communicating the same to the management.