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Internal control is a system in an organization that comprises of control environment and procedure, which help the organization in achieving business while internal audit is an activity carried out by professionals to ensure that internal control system implemented in the organization works effectively. Control is one of most important human need, that is present in almost every human activity. So in business, control have a great role to play to ensure best possible use of resources and increase profits. Most of the business activities in an organization are done by computers, individuals and other equipment, which requires to be checked periodically, to make sure that losses and wastes do not occur. Internal control and internal audit are commonly used interchangeably, but they have different meanings. In this article, we will discuss on the difference between internal control and internal audit. DEFINITION OF INTERNAL CONTROL Internal Control can be defined as a system developed, implemented and maintained by the management of a company to achieve objectives concerning:
Inter control comprises of five elements, which are related to each other and apply to all firms, but their implementation depends on the size of the firm. The elements include control environment, risk assessment, control activities, information and communication and monitoring. OBJECTIVES OF INTERNAL CONTROL The following are the objectives of internal control:
REVIEWS Review is one of the most important part of the internal control system. Auditors can use any of the methods: Narrative Records, Checklist, Questionnaire, and Flowchart. MEANING OF INTERNAL AUDIT Internal audit can be defined as an unbiased, rational assurance and consulting function, initiated by a company's management, to check all the activities of the organization. Internal audit involves regular and extremely important analysis of the functions of an organization, for the purpose of recommending improvements. Internal audit is aimed at assisting members of the firm in carrying out their responsibilities effectively. The task of internal auditing in an organization is done by the internal auditor, who is appointed by the management. He/she reports directly to the management regarding the analysis, appraisal, recommendation and all relevant information relating to the activities under supervision. OBJECTIVES OF INTERNAL AUDIT The following are some of the objectives of internal audit
Finally, both internal control and internal audit are of important to every organization, to evaluate the overall working. The scope of internal control is wider than that of internal audit, as internal control includes internal audit. Related Posts
What are the similarities between internal audit and internal control?Reporting format: both internal audit and internal control do not have a generally agreed reporting format. Achievement of objectives: both internal audit and internal control help organizations achieve objectives. Purpose: internal control is designed to achieve control objectives in three categories.
What is the difference between internal audit and internal control system?An internal audit is a check that is conducted at specific times, whereas Internal Control is responsible for checks that are on-going to make sure operational efficiency and effectiveness are achieved through the control of risks.
What are the similarities and differences between internal and external audits?Internal auditors will examine issues related to company business practices and risks, while external auditors examine the financial records and issue an opinion regarding the financial statements of the company. Internal audits are conducted throughout the year, while external auditors conduct a single annual audit.
What are the similarities and dissimilarities between internal audit and statutory audit?An internal audit performs various duties such as analysis of accounts and different activities of the organization. On the other hand, a statutory audit is only concerned with inspection, spotting errors, and checking the financial reports, accounts, and related documents.
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