Question

What are the 4 main objectives of a good system of internal controls?

Answer 1

First let us understand internal controls:-

Internal controls are processes employed in the organisation by managers to ensure certain control objectives.

4 main objectives of internal control are:-

1. Reliability - Reporting of Financial Statements must be correct and reliable

2.Compliance- Compliance with regualations must be ensured properly.

3. Efficiency- Efficiency and Effectiveness help to maximise profits and gaining competitive advantage.

4. Safety and Security- Safety and Security of valuable assets as well as other resources is important.