distinguish between Internal control & Internal Audit

This query is : Resolved 

20 March 2008

i am Studying in PCC and i am not grtting this answer so please help me out.

Late CA Sampat Jain (Expert)
20 March 2008

Definitions of Internal Control on the Web:

is a process within an organization designed to provide reasonable assurance regarding the achievement of the following primary objectives:

An organization's procedures that are designed to increase its efficiency, ensure its policies are implemented, and its assets are safeguarded.

Process, effected by management and other personnel of an entity, to provide reasonable assurance regarding achievement of objectives in the following categories: effectiveness and efficiency of operations; reliability of financial reporting; and compliance with applicable laws and regulations.

Internal control is the integration of the activities, plans, attitudes, policies, and efforts of the people of an organization working together to provide reasonable assurance that the organization will achieve its objectives and mission.

A plan of organization under which employees' duties are so arranged and records and procedures so designed as to make it possible to exercise effective accounting control over assets, liabilities, revenues, and expenditures. ...

Policies and procedures designed to provide reasonable assurance that a company's objectives will be achieved. It consists of control environment, risk assessment, control activities, information and communications and monitoring. ...

All the means, tangible and intangible that can be employed or used to ensure that established objectives are met.

Internal controls are processes, effected by management and other personnel, designed to provide reasonable assurance to ensure:

control of activities and finances built into the processes of an organization by means of which management ensures the achievement of objectives.

The organization and methods within a Federal agency which guard against fraud, waste, abuse, and mismanagement of resources.

an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.

Internal control is an activity (or interconnected number of activities, a system of internal control) to increase the likelihood that the goals of an organization will be met or risks to the organization will not materialize.
en.wikipedia.org/wiki/Internal control


Definitions of Internal audit on the Web:

audit performed within an entity by its staff rather than an independent certified public accountant; the function of internal auditor (IA) is ...

Internal audit is an independent appraisal of operations, conducted under the direction of agency management, to assess the effectiveness of internal administrative and accounting controls and help ensure conformance with managerial policies.

an independent appraisal function established within an organisation to examine and evaluate its activities as a service to the organisation.

An organisation’s own in-house team of auditors. Responsible primarily for evaluating the effectiveness of internal control systems & contributing to their ongoing effectiveness by providing advice & support to management.

means audits conducted by, or on behalf of, the organisation itself for internal purposes.

To provide sufficient and timely assurance services on all important aspects of its risk management strategy and practices, management control frameworks and practices, and information used for decision-making and reporting.

The Committee shall:

An examination of a company's records, policies, and procedures that is conducted by the company's own employees to ensure that service standards are met, data recorded in the company's files is accurate and complete, and established procedures are being followed. Contrast with external audit.

Internal Audit independently reviews the Risk Management process adopted including risk identification, evaluation and controls applied.

Refers to internal audit groups from the Office of the Comptroller General, Ministry of Finance and Corporate Relations or Financial Policy and Monitoring Branch, Ministry of Health and Ministry Responsible for Seniors.

Internal auditing is a management-oriented discipline that has evolved rapidly since World War II. Once a function primarily concerned with financial and accounting matters, internal auditing now addresses the entire range of operating activities and performs a correspondingly wide variety of ...
en.wikipedia.org/wiki/Internal audit


Chintan Gajjar (Expert)
20 March 2008

In a simple word it can be concluded that Internal Control is a system whereby the work of the employee is checked by other employee or office staff. But in case of Internal Audit the checking is done by other outside party which may or may not be chartered accountant. Hence we may say that for preventing fraud management establish efficient internal control system but for detecting fraud, management appoint internal auditor. Fromthe viepoint of purpose or objective the difference may be stated as. The objective of Internal Control is Preventing Fraud and the objective of Internal audit is Detecting Fraud which may occur eventhough there is internal control system.

Chintan Gajjar (Expert)
20 March 2008

You can refer AAS for further details.

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