Controls cannot provide absolute assurance. Describe some of the major limitations of internal control and explain...

Controls cannot provide absolute assurance. Describe some of the major limitations of internal control and explain how they diminish the reliability of internal controls.

Expert Solution

Internal control refers to the set of standards and rules that are designed by the management with the goal of achieving organisational objectives. However, these controls have certain limitations which make it difficult to rely on the internal control system. Some of these limitations are as follows:

Since internal control are made by the management and communicated to the employees to be followed, employees may feel unsatisfied, over worked or stressed due to the additional controls imposed on them. So, they may not respond to the controls positively and it will affect the overall working of the organisation.

2. In internal control mechanism all the controls are within the organisation. Personnel may collude and use it for their own benefits instead of working for the organisation.

3. Human error is another limitation in internal control. Internal controls are designed by the managements for the employees working in the organisation. If any of them made a mistake either in making a control or in understanding a control, it will negatively affect the overall objective of the internal control.

4.If segregation of duties in not done properly than one person will be interfering in another person’s work. And none of the employee will be able to work in the required manner.

ekkarill92 answered 1 year ago

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