Internal Control Objectives

According to Cahill (2006), highlights that internal control is “the system of internal administrative and financial checks and balances designed by management and supported by corrective actions to ensure that the goals and responsibilities of the organization are achieved.”

Besides, Alan G. Hevesi (2005) as cited by Douglas (2011), also defined internal control as “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”.

So, on the basis of above definitions, it is clear that internal control is a broad term with wide area of operation. It includes a number of methods and measures

It must include information on the principal risks and uncertainties that may affect a company’s long-term value.

2.3 Objectives of internal control system

As indicated in the above definitions, internal control helps to achieve the organization's objectives and mission and there are four purposes of internal control:

1. To produce quality products and services, to promote efficient and effective operations and consistent with the organization's mission;

2. To protect resources against loss due to errors and fraud waste, abuse and mismanagement;

3. To guarantee adherence to laws, regulations, contracts and management directives; and

4. To maintain reliable financial and management data, and to present that data accurately in timely report.

The organization most probably can achieve its objectives and mission if it cover these four purposes in developing its internal control system. But failure to sufficiently address any one of these purposes may put the organization at risk. Therefore by establishing a sound internal control system organization can either prevent or reduce the

The operational efficiency and effectiveness is the first. So, effectiveness relates to the quality of controls over the achievement of specific management objectives, while efficiency addresses the quality of controls yielding an optimum measure of resource inputs to productive outputs. This objective illustrate that no material inefficiencies exist in the organization or the processes. The second objective is accuracy of financial reports and statements produced, it is related to the first one. This objective highlights the adequacy and effectiveness of controls leading the reliability of financial data used for external reporting. The third objective is compliance with laws, regulations, policies and procedures. These emphasizes on the adequacy and effectiveness of controls that govern adherence to external laws and regulations. This examines the correlation among the laws and organization’s procedures and actual