Benefits of Internal Control System:
– Effectiveness and efficiency of operations.
– Reliability of financial reporting.
– Compliance with applicable laws and regulations
Limitations of Internal Control System:
– Poor judgement in decision-making due to inadequate information or inexperienced staff.
– Human error can cause failures although a well-designed internal control environment can help control this to a certain extent.
– Control processes being deliberately circumvented by employees and others.
– Management overriding controls, presumably in the belief that the controls put in place are inconvenient or inappropriate and should not apply to them.
– The occurrence of unforeseeable circumstances is the final cause referred to in the Turnbull Report.