Internal Control, Internal check and Internal audit in Auditing

Internal Control:

Spicer and Peglar has defined internal control as" Internal Control is best regarded as the whole system of controls, financial and otherwise, established by the management in the conduct of a business including internal check, internal audit and other forms of control"

This definition implies the following:

• The internal control is a system of controls
• Controls are established over financial and non financial areas
• The mechanism of controls may manifest itself in the forms of internal check or internal audit or other forms.

Internal control is a perception and practice of a system by management. The system encompasses plan, methods and procedures prescribed for and practiced by the internal constituents of an entity. The aim for prescription and practice of such a system is to ensure control over accounting and other administrative areas in order to bring forth efficiency and orderliness.

Internal Check:

It is a system under which the accounting methods and details of an establishment are so laid out that the accounts and procedures are not under the absolute and independent control of any one person i.e the work of one employee is complementary to that of another and that a continuous audit of the business is made by employees.

It is an accounting procedure whereby routine entries for transactions are handled by more than one employee in such a manner that the work of one employee is automatically checked against the work of another for detection of errors and irregularities.


Internal Audit:

Internal audit is the independent appraisal of activity within an organisation for the review of accounting, financial and other business practices as p protective and constrictive arm of management. It is a type of control which functions by measuring and evaluating the effectiveness of other types of control.
It implies an audit of the accounts by the employees of the business. The work is done by a seperate set of staff who may or may not have professional audit qualification. The function of an internal auditor is same as that of ab auditor.