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INTERNAL CHECK
C. P. Mansoor Ahmed M. Com PGDBA

Internal Control
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Size Operation Internal Control is best regarded as the whole system of controls, financial and otherwise, established by the management in the conduct of a business including internal check, internal audit and other forms of control.

Internal Control
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Accounting & Administrative Controls

Efficient

and orderly conduct of transaction Safeguarding the assets in adherence to management policies Detection & Prevention of Errors & Frauds Ensuring Accuracy, Completeness, Reliability and Timely preparation of Accounting Data

Internal Check
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One of the Modes of Implementing Internal Control a system under which the accounting methods and details of an establishment are so laid out that the accounts and the procedure are not under the absolute and independent control of any person that, on the contrary, the work of one employee is complementary to that of another and that a continuous audit of the business is made by the employees.

Good INTERNAL CHECK

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Division of Work Job Rotation Authority Levels Separation of Custody and Recording Accounting Controls

Vouching of CASH Transaction

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OBJECTIVES: All Vouchers are Accounted No Fraudulent Payment is Made All Receipt & Payment are properly recorded Verify Cash in Hand & Cash at Bank

Vouching Voucher
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Voucher: it is a documentary evidence supporting the transaction in the Books of Accounts.

Verification of Transaction with counterfoils, Intelligence, Critical Bent of Mind, Common Sense, Observation.

Vouching
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Voucher Numbering Ordering Attention to dates, names & amount Stamped, Initials etc Special Attention: Personal Name, Partner, Director Duly Signed, Authorized Duly Stamped Nature of Receipts & Payments Elucidation Scrutinize the Duplicate Vouchers Avoid involvement of Members of Client Staff Receipted Invoice Printed Receipts as Voucher Payments of Rent Rates & Taxes Advances - Adjustments

Internal Check as regards to Cash

Check internal operation Access to books of accounts

Receipts against cash Rough Cash Book Remittances opened before officer Automatic tills or cash register Deposit all cash receipt every day BRS prepared regularly Issue of Cheque authorized by the officer Independent check of Castings of Cash Book Preparation of Wage sheet Payment by cheques except petty Collection by travellers

Cash Book
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Debit

Credit

Opening Balance Cash Sales Receipts from Debtors Income from Interest, Dividends etc., Loans Rents Received Bills Receivable Commission Sale of Investment Bad Debt

Payment to Creditors Wages Capital Expenditure Loans Salaries Agents & Travelers Commission Travelling Allowance Insurance of Premiums Bills of Payable Bills Receivable Discounted & Dishonoured

Dividends
Subscription Insurance Claim Money Share Capital Sale of Fixed Assets Miscellaneous Receipts

Freight Carriage & Custom Duties

Bank Charges Partners Drawings Postage Petty Cash

Internal Check as regard to PURCHASES

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Orders 2 copies (Supplier & Reference) On Receipt Goods Receipt Book Invoice Goods Receipt Book Verified Check Calculations in Invoice Invoice Copy Person in charge Clerk Purchases Book Initial the invoice copy.

Duty of an Auditor CREDIT PURCHASES

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Return: Credit Note Purchase Return Journal Return Outwards Book

Gate Keepers Outwards Book

In clients name Authorize person in charge Date of Invoice Period under review Review of Verification Goods on Invoice Capital Test Check Purchases Book Expenses Debited to Purchases Account Compare the Books Stamp, Check Mark, Initial Duplicates Credit Conformation Statement

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Internal Check as regard to SALES

Order Order Received Book (Name, Particulars of Goods, Date & Mode of Transport) Copy Dispatch Department Clerk compares goods in order packed by DD Rate of charge Responsible officer Preparation of Invoice 2/3 copies One copy clerk sales book One copy gatekeeper goods outward book Traveler Sales Man 3 copies

Duties of an Auditor CREDIT SALES

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Reasons for Return Gatekeeper Sales Return Book Credit Note

Review Internal Check System in Place Invoice Sold Sales Book Goods on Sale or Compare Return System Order Received Book, Goods Outward Book, Gatekeepers Outward Book, Delivery Note etc Goods Sent on Consignment Sale of Asset treated as a ordinary sale Packagesof & Empties Statement accounts from client Check sales during last days and weeks Journal invoice duplicates Cancelled Sales TaxLedger & Insurance etc debited & credited Bought into appropriate accounts Sales Ledger Sales to sister concerns and associates Total Accounts & Sectional Balancing Different trade discounts - examined

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Internal Check as Regard to WAGES

Check inclusion for Dummy Workers Errors or Fraud piece work records Clerical Works Dispensed Employees Retained Over Stating Rates Over Stating Hours/days of Work Conversion of unpaid wages Over footing of pay roll sheets Understatement of deduction

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Internal Check with regard to WAGES

Time Records

Piece Work Records

Preparation of Wage Sheet

Payment of Wages

Duties of an Auditor - WAGES

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Check Loop hole Wage Sheet or Wage Book Calculation are Correct Wages payable, paid & unpaid Dummy Workers Initialed ID verification Authorized Number of workers Wage sheet ESI Card, PF Account Total wages estimates of costing department Duly signed - comparison Leave register Wage payment vs. advance payment Employment of Casual Labourer Test Check

INTERNAL AUDIT
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