{"id":1782,"date":"2023-09-26T13:07:40","date_gmt":"2023-09-26T13:07:40","guid":{"rendered":"https:\/\/mudabicara.com\/en\/?p=1782"},"modified":"2023-09-26T14:11:10","modified_gmt":"2023-09-26T14:11:10","slug":"what-is-internal-control-definition-types-purpose-components-and-elements","status":"publish","type":"post","link":"https:\/\/mudabicara.com\/en\/what-is-internal-control-definition-types-purpose-components-and-elements\/","title":{"rendered":"What is Internal Control? Definition, Types, Purpose, Components and Elements"},"content":{"rendered":"

What is Internal Control? <\/span>The definition of internal control is<\/span><\/span> \u00a0a system and procedures of a company to protect assets within the company. <\/span>It is also used to ensure compliance with applicable policies and regulations. <\/span>What is meant by internal control is that all data from a section will be automatically checked by other sections in a company.<\/span><\/span><\/p>\n

In accounting theory, internal control is a process influenced by human resources and information technology that is designed to help an organization or company achieve its respective goals. <\/span>Internal control is a way to supervise, direct and measure human resources in an organization or company.<\/span><\/span><\/p>\n

This internal control is quite important for the company because it concerns data within the company because every time data comes in it must be verified. <\/span>Examples include job rotation, leave applications, official work reports, and so on.<\/span><\/span><\/p>\n

This internal control system includes all methods and tools established to maintain the security of company property and data, check data accuracy, increase operational efficiency, and maintain previously established regulations. <\/span>This activity in internal control is important to discuss because it is not much different from other activities such as business, production, and the legality of goods.<\/span><\/span><\/p>\n

This book is aimed at officials who work in central government and regional government agencies related to accounting and reporting control systems, and State budget implementation control systems.<\/span><\/span><\/p>\n

<\/span>Understanding Internal Control According to Experts<\/span><\/span><\/strong><\/h2>\n

Internal control has previously been discussed by experts. <\/span>The following are several definitions of internal control.<\/span><\/span><\/p>\n

<\/span>1.\u00a0<\/strong>Horngren (2009:390)<\/strong><\/h3>\n

Internal controls are all plans and actions within an organization designed to safeguard assets, encourage employees to follow company policies, ensure proper accounting records, and improve operational efficiency.<\/span><\/span><\/p>\n

<\/span>2. Power (2016:159)<\/span><\/span><\/strong><\/h3>\n

Internal control is a set of policies and procedures created to protect company assets or property from misuse, guarantee <\/span><\/span>accurate accounting information, and ensure that all regulations and laws and management policies are complied with by all employees.<\/span><\/span><\/p>\n

<\/span>3. Dasaratha, V. Rama-Frederick, L. Jones (2008:132)<\/span><\/span><\/strong><\/h3>\n

Internal control is a company policy process that is influenced by the entity’s board of directors, management, and other personnel. <\/span>This was created to ensure certainty regarding several achievements including operational effectiveness and efficiency, accuracy of financial reports, and compliance with applicable regulations.<\/span><\/span><\/p>\n

<\/span>4. IAPI (2011:319.2) in Thorman Lumbanraja<\/span><\/span><\/strong><\/h3>\n

Internal control is a process carried out by the board of commissioners, management and other personnel to ensure several achievements including the reliability of financial reports, operational effectiveness and efficiency, as well as compliance with applicable regulations.<\/span><\/span><\/p>\n

<\/span>5. Mulyadi (2013:163)<\/span><\/span><\/strong><\/h3>\n

Internal control is an organizational structure <\/span><\/span>, methods and measures that have been coordinated to safeguard the assets of a company whose duties include checking the accuracy of financial reports, encouraging operational efficiency and encouraging employees to comply with existing management policies.<\/span><\/span><\/p>\n

Read Also : What is a Giro? Check the Differences between Current Accounts, Checking and Savings Accounts<\/a><\/strong><\/span><\/pre>\n
<\/span>Types of Internal Control<\/span><\/span><\/strong><\/h2>\n
Based on the objectives of internal control, this type of internal control is divided into two, namely, accounting internal control and administrative internal control.<\/span><\/span><\/p>\n
<\/span>1. Internal Accounting Control<\/span><\/span><\/strong><\/h3>\n
What is controlled in internal accounting control includes data reliability, approval, separation of operational functions, recording, supervision and monitoring of company assets.<\/span><\/span><\/p>\n
This book reviews modern ways of carrying out purchasing transactions and the needs of companies to carry out data and information processing activities effectively, efficiently <\/span><\/span>, accurately and quickly for quality products\/services and to be able to face current business competition.<\/span><\/span><\/p>\n
<\/span>2. Internal Administrative Control<\/span><\/span><\/strong><\/h3>\n
In its control, internal administration takes care of several things including business efficiency, risk analysis, board of directors’ policies, resource management and quality control.<\/span><\/span><\/p>\n
Based on their benefits, types of internal control are also divided into three groups, namely.<\/span><\/span><\/p>\n
<\/span>1. Preventive Control<\/span><\/span><\/strong><\/h3>\n
This control is used to prevent errors from occurring. <\/span>In this case, checks will automatically be carried out designed to prevent misuse.<\/span><\/span><\/p>\n
<\/span>2. Detective Control<\/span><\/span><\/strong><\/h3>\n
This control is used to detect errors that occur in entering data.<\/span><\/span><\/p>\n
<\/span>3. Corrective Control<\/span><\/span><\/strong><\/h3>\n
This control is used to provide information to management to correct errors that occur. <\/span>These controls are designed to correct detected errors.<\/span><\/span><\/p>\n
Based on its scope, types of internal control are also divided into two groups, namely.<\/span><\/span><\/p>\n
<\/span>1. General Control<\/span><\/span><\/strong><\/h3>\n
This control is used to process all activities related to data on the computer. <\/span>Things that are processed include, separation of responsibilities and data processing.<\/span><\/span><\/p>\n
<\/span>2. Application Control<\/span><\/span><\/strong><\/h3>\n
This control is used to monitor the course of transactions and use of programs in computer applications. <\/span>This control aims to ensure that every transaction is always recorded, authorized, processed and reported properly.<\/span><\/span><\/p>\n
<\/span>Internal Control Objectives<\/span><\/span><\/strong><\/h2>\n
The following are some of the objectives of internal control in a company.<\/span><\/span><\/p>\n
    \n
  1. To ensure company activities run according to applicable policies.<\/span><\/span><\/li>\n
  2. To safeguard assets or finances in a company.<\/span><\/span><\/li>\n
  3. To achieve the goals of the company that have previously been set.<\/span><\/span><\/li>\n
  4. To produce accurate and precise financial reports.<\/span><\/span><\/li>\n
  5. To prevent losses occurring to company resources.<\/span><\/span><\/li>\n
  6. To ensure compliance with the policies set by company management.<\/span><\/span><\/li>\n
  7. To encourage the effectiveness and efficiency of the company’s operational activities.<\/span><\/span><\/li>\n<\/ol>\n
    <\/span>Internal Control Components<\/span><\/span><\/strong><\/h2>\n
    Internal control components are divided into five. <\/span>The following are the components of internal control.<\/span><\/span><\/p>\n
    <\/span>1. Control Procedures<\/span><\/span><\/strong><\/h3>\n
    In carrying out internal control, of course there are procedures that must be carried out first. <\/span>This aims to ensure that internal control continues to run as planned. <\/span>The existence of this procedure is also a precaution against fraud and errors in company activities.<\/span><\/span><\/p>\n
    Procedures in internal control include:<\/span><\/span><\/p>\n