QS Study

Advantages of Internal Check System

Internal Check is an arrangement of staff duties of a business in such a way that work is automatically checked by the next staff while performing their duties. It is a system or method introduced with defined instructions given to staff as to their sphere of work with a view to controlling and verification of their work and also maintenance of accurate records as the ultimate aim.

Internal check system is used to the number of parties which are as follows:

(a) Advantages to an Auditor

If 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.

(b) 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. It helps to increase the production and reduce the cost. So, it helps to increase sales ax profitability.
  • 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 of the accuracy and reliability of books of accounts.

(c) Advantages of Business: Internal check system is beneficial to the business also. So, the advantages which can be achieved by the business are as follow –

  • 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.
  • Work of every staff is checked automatically. So, the staffs remain honest which increases the profitability of a business.
  • Every book of accounts remains correct, so the final account can be prepared in less time, cost, and labor.