2 Internal control environment andprocedures. Characteristics of a good internal controlsystem-A clear defined organisation structure-Adequate internal checks-Acknowledgementofworkdone-Protective devices for physical security- Formal documents should acknowledge thetransfer of responsibility for goods-Pre-review
2 Internal control environment and procedures • Characteristics of a good internal control system – A clear defined organisation structure – Adequate internal checks – Acknowledgement of work done – Protective devices for physical security – Formal documents should acknowledge the transfer of responsibility for goods – Pre-review
2 Internal control environment andprocedures- Clearly defined system for authorisingtransactions within specified spending limits-Post-review- There be authorisation, custody and re-orderingprocedures-Personnel-Internal audit
2 Internal control environment and procedures – Clearly defined system for authorising transactions within specified spending limits – Post-review – There be authorisation, custody and re-ordering procedures – Personnel – Internal audit
2 Internal control environment andproceduresLimitations on the effectiveness of internalcontrols- Segregation of duties be avoided by the collusion- Authorisation controls can be abused-Management can often override the controls
2 Internal control environment and procedures • Limitations on the effectiveness of internal controls – Segregation of duties be avoided by the collusion – Authorisation controls can be abused – Management can often override the controls