Question

Briefly discuss the seven broad principles of internal control. At what stage in the development of a business do internal control procedures become especially critical?

Answer 1

The principle of internal control are the concepts that require management to set procedures in place to ensure company assets are safeguarded. The seven broad principles of internal control are: responsibility should be clearly established, Adequate records should be maintained, Assets should be insured and employees bonded, Record keeping and custody of assets should be separated, Responsibility for related transaction should be divided, Technology should be used where practicable, Regular and independent review of internal control procedures should be performed.

Internal control procedures become especially critical when the manager of a business can no longer control the business through personal supervision and direct participation. When manager of the business personally supervise and direct the development of business than it would be smooth running of the development program of the business.