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Evaluative Criteria for Good Internal Check


Evaluative Criteria for Good Internal Check

A good internal check system must provide in-built checks and balances while the operations are being performed. To achieve this end,the following control mechanism may be introduced :
  1. Division of Work:No one should be allowed to have right to perform the work from origin to end. For example,a transaction of sale may have to be split into display of article by a staff,the preparation of invoice by another the receipt of cash against the invoice by a third clerk, the delivery of article against the proof of receipted invoice by another clerk,checking of outward movement of article against delivery order by a clerk and so on.
  2. Job rotation: No individual clerk should be allowed to occupy a particular area of operation for long. Familiarity with and exclusiveness in a position offers a person greater flexibility to attempt manipulation with the system.
  3. Authority levels: There must be clear cut authority levels for according sanctions to various transactions. Commensurate to the authority vested,responsibility must be extracted.Existence of authority levels result in review of operations of subordinates.
  4. Separation of custody and recording: There needs  to be effective control by way of separation that the persons handling an asset cannot make entries for the transactions without any counter check. For example in a bank the payments effected by cashier are entered in his rough cash chits. Simultaneously the officer authorising payments maintain a scroll of payments authorised.
  5. Accounting controls: In order to ensure internal check with regard to recording of transactions in accounting records various cross checks must be introduced to ensure that the accounting records reflect reliable information.

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