Question

Q1- A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?

Answer 1

It is vital to an organization, large or small, to have a fraud and error prevention plan in place. Internal controls are policies and procedures put in place to ensure the reliability of accounting systems. Some of the internal control procedures have to be adapted in the premises of a company to ensure detection and early prevention of frauds and errors are:-

• Extensive division of duties and responsibilities within the organisation
• Separation of accounting function with the custodial function
• No single person is entrusted with the responsibility of completing a transaction all by himself
• The work performed by each one is expected to come under review of another in the casual course of routine
• There is proper documentation and recording of the transactions
• There should be proper authorisation of transactions
• Assets should be verified at reasonable intervals
• Compliance with applicable laws and regulations
• Accuracy and completeness of accounting records
• Implementation of budgetary controls
• Persons having physical custody of assets must not be permitted to have access to the books of account.