Business Finance, accounting, contract, advisor investment consulting marketing plan for the company with using tablet and computer technology in analysis.

The control is a continuous process. It is a part of the routine in all types of organisations whether small or big. The word ‘control’ itself is disliked by one and all, nobody likes to be controlled by others no matter how small or big employee he may be.

Table of Contents


The whole system of control, financial and otherwise, established by the management in order to carry on the business of the enterprises in an orderly and efficient manner, ensure adherence to management policies, safe-guard the assets and secure as far as possible the completeness and accuracy of the records.

Objectives of Internal Control:-

  1. To check frauds and thefts.
  2. To safeguard the assets of the business from thefts and misuse (cutlery and small equipment).
  3. To improve the efficiency.
  4. To follow the policies of the management.
  5. To improve the quality.
  6. To complete the records up to moment.

The following are the main types of internal control:

  1. Organisation
  2. Division of duties
  3. Physical Control
  4. Supervision
  5. Financial Accuracy


The management must make the organisation chart of all the departments. The authorities, responsibilities, reporting to, must be clearly identified, each job must be clearly described and specified. In case of delegation of power, it should be in writing with the approval of superiors. It must be clear to superiors that the authority/power can be delegated to subordinates but the responsibility cannot beelegated. The superiors are always responsible for the deed and misdeeds of subordinates. In larger hotels a lot of power is delegated to juniors because one person cannot perform all the duties. In smaller hotels the owner himself supervisors almost everything. The organisation chart of a hotel may differ from hotel to hotel, depending upon the size of the hotel, policy of the hotel, mechanical devices available, etc.

Division Of Duties

The duties among different employees must be divided to have an effective control but in smaller hotels, the broad division of duties may not be possible. For example, in a large hotel the bill clerk and cashier can be a separate person; this will have a control of one person over other and fewer chances of cash pilferage.

Physical Control

In hotels, the security is assigned to an outside agency so that security guards and hotels staff do not become friendly. All the departments, when not in operation must be locked and key, after sealing, must be kept with the security officer. The employees must use only staff gate for coming and leaving the hotel. This gate must be manned by a security officer round the clock. Each staff member must be checked physically to ensure that they are not taking away hotel’s property, maybe by mistake, like matchboxes, hand towels, knife etc. The stores must be locked after normal working hours and no unauthorised person should be allowed to enter. The cash book, keys, cheque, books, etc. must be kept in safe custody of the responsible person.


The supervisors must authorise/approve all the transactions of the hotel. All cutting/overwriting must be countersigned. The power of the supervisors must be specified in writing to avoid confusion.

Financial Accuracy

The totals, calculations, pricing of each bill must be checked for its accuracy. The overcharging and under-charging are very bad for the hotel. The bank account must be reconciled on weekly basis. The checks and K.O.T.’s must be numbered. At the end of every month ledgers must be balanced and trial balance prepared.

To ensure the effective control, the staff must be regularly trained. It is rightly said that training is a continuous process; every employee must be trained for a minimum of 100 hours in a year. The new employees must be imparted training before putting them on the actual job. The old staff knowledge must be updated and in case of shifting to new systems/methods the staff must be trained and motivated. The supervisors and management must ensure that the systems developed by the hotel must be followed by everyone and this will always ensure the perfect internal control.

Print Friendly, PDF & Email
Previous articleCharacteristics of Internal Control
Next articleAn introduction to Internal and Statutory Audit


Please enter your comment!
Please enter your name here