Question

At least 3 internal control principles implemented (by a company you are familiar with) to secure company assets and cash

Answer 1

Internal controls includes the processes and procedures that an entity adopts to protect its assets, property, cash etc. The principles of internal control are the concepts that adopted by management in place to ensure company assets are safeguarded and no misuse or abuse of asset is observed.

The principles of Internal Control :

1. Segregation of duties :

This principle focuses on proper separation of duties, no single person has control over the entire cash process. The person handling of physical asset and the person who keep the records relating to that asset shall be different persons. If, for example, the person who is keeps the petty cash records shall be different from the person who keep petty cash box.

2. Accountability, responsibility and Authorisation

The person who handle the certain work must be held accountable for the leakage or mistake in handling. Sometimes, several sub- tasks must be completed to complete a single transaction. In this case, it is important that different employees perform the separate tasks making up the transaction and held responsible for the work handled by them. The authorisation by proper officer / authorised person must be given for transaction to authenticate the transaction

3. Independent Review of activities :

Entity must review their internal control systems and activities regularly. in certain interval. This must be done as Surprise Check in necessary places, for instance Verification Cash. This should be done by an individual preferably outside who did not perform any of the work being checked. An independent checker can provide internal control recommendations and report on the work being done throughout the internal control process, without any reason to cover mistakes.