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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