An internal check is a part of internal control. It is concerned with the arrangement of duties of various employees of a business in such a way that the work of one employee is automatically checked by another employee. It is the mechanism set to identify mistake conducted by one employee by another employee and rectify it. It is the way of identifying the errors or frauds or mistakes of one employee by another and ensuring they are identified, rectified, and prevented. For example, employee A makes the records of transactions in journals and employee B posts them in a letter, and employee C checks its mathematical accuracy by preparing the trial balance. Here, the mistakes of employee A are rectified by employee B, and the mistakes of employee B are checked and rectified by employee C.

Internal check aims at prevention of errors and frauds and/or detection of errors and frauds as early as possible. It is an essential part of day-to-day activities and is a continuous process. It relates to all the transactions that take place every day. An internal check is achieved by complementary allocation of duties and by independent verification of the work of one person y another person. Internal check ensures proper recording of all financial transactions along with the efficiency of the accounting system followed by the organization and enables easy preparation of financial statements.

Elements of Internal Check

An internal check is setting a system of responsibility assignment and the responsibility of one being checked by another person as part of her/his responsibility. It comprises different elements. The elements of the internal check have been presented below:

• The check is to be carried out continuously as a part of the routine system of the organization
• Existence of checks on a day to day transactions including both financial as well as non-financial
• The work of each employee though independent is complementary to the work of another
• The work is divided among the employees and each employee is assigned a specific task

Objectives of Internal Check

The internal check has the objective of checking the work done by one employee through the work of another employee. It has some other objectives also. The objectives of the internal check have been mentioned below:

• To eliminate the frauds and errors that may be committed by the employees
• To ensure a high degree of accuracy and reliability of accounting information and promote operational efficiency
• To measure how far the policies of the management are being implemented
• To exercise moral pressure over the employees
• To safeguard the asset of the business by preventing misappropriation of cash or stock or other resources
• To detect errors and fraud promptly that help to minimize their effects in the long run
• To evaluate the efficiency of performance in all aspects of business activities and to highlight the weaknesses

Principles of Internal Check

An internal check is a system or process by which the mistake, error, and fraud of one employee are detected by another employee. It is guided by some principles which make it acceptable and effective in an organization. Some key principles of the internal check have been presented below:

1. Responsibility: The allocation of work has to be done for each employee judicially and clearly in such a way that the responsibility of one employee is the work to check the work of another employee.
2. Rotation: The employee should be shifted from one set of work to another as part of ensuring an independent check of the works being done by another.
3. Automatic Check: The work of one employee is automatically checked by another employee to form an effective internal check system.
4. Safeguard: Internal check is concerned with the safeguard of files, securities, cheque book, etc.
5. Supervision: It is supervising the work as well as the procedure of internal check.
6. Dependence: Too much dependence on employees as part of an internal check must not prevail in the internal check system.
7. Formal Sanction: No deviation or alteration to the prescribed check system should be allowed without formal sanction of it to the concerned employee.
8. Review: There should be sufficient scope for review of the internal check system to initiate and implement improvement.

Advantages and Disadvantages of Internal Check

Advantages	Disadvantages
Provides accurate and reliable accounting information to the owners Increase in profit due to economy in operation and efficiency in overall system Facilitates internal and external audit Quick preparation of financial statements Great check of commission of errors and frauds Early detection of errors and frauds Proper division of works among employees Increases efficiency of work	Costly to initiate for small businesses Compromise in quality of work as employees work faster to achieve the results Chance of conflict between or among employees as thee error of one is detected by other Delay in work if employees form a group for fraud and errors

Internal Check Vs. Internal Audit

Internal checks and internal audits are key components of the internal control system. They both constitute different and complementary aspects for an effective internal control system. Some key differences between internal check and internal audit are as follows:

1. An internal check is an arrangement of the duties of employees in such a manner that the work performed by one person is automatically and independently checked by another. But internal audit is a review of various operations and records of the company by the employee, specially appointed for the purpose.
2. The objective of an internal check is to prevent and minimize the possibilities of errors, frauds, or irregularities, On the other hand, an internal audit has the objective of detecting errors and frauds which have already been committed.
3. Internal check works during transactions whereas internal audit is performed after the completion of different accounting transactions.
4. The internal check has limited scope as compared to internal  audit
5. No new or separate employee is required for an internal check as in the case of internal audit
6. An internal check is automatic checking of the progress of the work whereas an internal audit is the review of completed works and making necessary suggestions
7. All employees in an organization are directly or indirectly part of an internal check system. But a team of few employees with specific skills are involved in internal audits.