Question

From the below partial flowchart, which of the following choices seems to indicate an internal control? A check is prepared A review is done of these documents: check, receiving report, and approved PO before the check is signed A credit history is reviewed Multi-copies of documents are used

Answer 1

Internal control is a procedure that the management places within its process to increase efficiency, stop any kind of fraudulent activities, safeguard assets and increase accountability.

In the given flowchart, the second step, i.e. review done on the documents is considered to be an internal control procedure. Review means again checking the work done by the other person.

Another internal control identified in the process is using multi copies of documents - this ensures that all the respective departments get the same copy of the document to enhance documentation and consistency of information and data.