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What is internal check and what are its advantages and disadvantages?

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What is internal check and what are its advantages and disadvantages?
posted Jun 11 by Harvinder Singh

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Advantages
1. System of internal check puts moral check on members of staff and enables them to learn honesty, hard work and straight forwardness.
2. System of internal check determines the responsibilities of employees. The member of the staff maybe held responsible for any irregularity carried on by him.
3. There is a less possibility of frauds under the system of internal check because errors and frauds can be detected at an early stage and without assuming any complications.
4. The system of internal check ensures greater efficiency and speed because the arrangement of internal check is based on division of labor.
5. In internal check system the ‘Profit and Loss Account’ and ‘Balance Sheet’ is prepared without any loss of time.
6. The system of internal check may also result into correct and complete records of all the transactions on each balancing or the books of accounts.
7. If there is good internal check system, the owner can be assured upon the genuineness and accuracy of accounts.
8. If the auditor finds the system of internal check satisfactory, then by taking into mind its defects or weak points he can take the help of test checking.

Disadvantages
1. The system of internal check is more expensive and time consuming,
2. The auditor may show slackness in the work. He may rely on the system of internal check blindfold, which may affect the quality of audit work adversely.
3. The system of internal check is not suitable for small concern as it may be uneconomical for them.
4. If the employees of the concern join hand they may keep the employer in dark and may cause many irregularities defying any detection thereof, This group-ism amongst the employees may not be healthy.

answer Jun 11 by Salil Agrawal
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