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Auditing - Disadvantages of Internal Control | 12th Auditing : Chapter 2 : Internal Control

Chapter: 12th Auditing : Chapter 2 : Internal Control

Disadvantages of Internal Control

Anaudit control system can give the following limitations or disadvantages:

Disadvantages of Internal Control


Anaudit control system can give the following limitations or disadvantages:

1. Organizational Structure: Deficiencies in organizational structure make internal control ineffective.

2. Size of the Organization: Small organizations have very low levels of internal control, which are almost negligible due to more interference by owners and management.

3. Unusual  Transactions:  The  internal control procedures  normally fail to keep a check on unusual transactions.

4. Costly: The implementation of internal control procedures and processes involves incurring costs in terms of time, effort and resources.

5. Abuse of Power: Members at the top-level management may override or interfere with control.

6. Collusion of two or more People: It may lead to internal controls being over- ridden.

7. Obsolescence: Control system may become redundant with passage of time if not updated with change in the size and nature of business.

8. Human Error: Internal control fails as there are posibility of human errors.

9. Frequent follow-up measures: Follow-up procedures need to be frequent to ensure its effectiveness, which is extremely time-consuming.

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