Advantages of Internal Check System

Internal Check helps in proper distribution of work between employees based on their qualification and experience. It enables the employees to perform the work efficiently. It is concerned with staff duties so that a single person is not allowed to record every aspect of a transaction.

Advantages of Internal Check System

Internal check system is useful to a number of parties which are as follows:

(1) Advantages To An Auditor

If the internal check system is effective, an auditor can apply test check rather than checking the books of accounts in details. So, an auditor can save his time and labor which simultaneously saves the cost.

An auditor can conduct a final audit in a short time with less effort because there is no need to examine all the accounting records in details. He can select a limited sample of transactions. This enables him to finish the audit work within time.

(2) Advantages To Businessman

Following advantages can be achieved by the businessperson from internal check system:

  • Internal check detects errors and frauds which increase the morale of honest staffs. Internal check system helps to discover errors and frauds very quickly because errors of one staff are detected by another. So, errors and frauds can be prevented before the audit. It helps to increase production and reduce cost. So, it helps to increase sales and profitability.
  • It makes possible to prepare final accounts of the company (trading account, profit and loss account, and balance sheet) in a short time which facilitates the final audit.
  • Staffs know the real position of the business. So, it helps to maintain a good relationship between staffs and managers.
  • Internal check system assures the owners in the accuracy and reliability of books of accounts.
  • Overall efficiency and economy in operations result in more profit – thus ensuring larger dividends for the owners or shareholders.

(3) Advantages to Business

Internal check system is beneficial to the business also. So, the advantages which can be achieved by the business are as follows:

  • Right, responsibility and duties of staffs are clearly defined under the internal check system. So, they perform work wholeheartedly which reduces the chances of errors and frauds and increases profit.
  • Internal check system is based on the principle of division of labor. So, the work of a business can be completed easily at minimum cost.
  • It is very suitable for large business firms with many staffs, large financial transactions, and large resources.
  • Work of every staff is checked automatically. So, the staffs remain honest which increases the profitability of a business.
  • It helps to increase the efficiency of the employees which leads to higher productivity.
  • Every book of accounts remains correct, so a final account can be prepared in less time, cost and labor.
  • Internal check entails a proper and rational distribution of work among the members of staff of the enterprises keeping in view their individual qualifications, experience and area of specialization.

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