According to Spicer and Peglar “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”.

As per the above definition we can say that :-

  • The internal control is a system of controls.
  • Controls are established over financial and non-financial areas.
  • The method of control may be in the form of internal check or internal audit or other forms.

Advantages of Internal Control

  • It does the efficient conduct of its business.
  • It is useful for safeguard of business.
  • It prevents and detects the fraud and error.
  • It provides accuracy and completeness of the accounting records.
  • Reliable financial information are prepared timely.

Disadvantages of Internal Control

  • More money is spent to keep the internal control staff as well as the auditors.
  • Internal control is not beneficial in case of small business firms.
  • The dispute always remains between the regular accounts staff and the internal control staff.
  • The morale of accounts staff also affects.
  • If the internal control staff is lazy then there is no use of internal control.
  • There may be confusion in views of internal control staff and the statutory auditors or internal auditors.
  • Internal control system is wastage of time.


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