The reason is quite simple. If only one person is made responsible to finish up a particular work from the beginning to the end, there is enough scope for errors and fraud creeping into the books of accounts.

The possibility of frauds can arise only when there is collusion between the clerks. Such situations will have to be avoided to ensure a clean and efficient recording of business transactions.

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Besides this, it is also kept in mind at the time of distributing the work that changes should be made in the assignments and responsibilities as and when needed.

By doing so the work of one person is automatically checked by another and errors, fraud and irregularities can easily be detected. The result is that the efficiency of the business increases in the long run.

This is a system of internal check which is based on the principle of division of labour. It is certain that if the system of internal check is good and efficient, the possibility of errors or fraud or irregularity will be minimized and the business can enjoy the benefit of division of labour and of specialization.

This is a big question which will depend upon the magnitude of a business. It is true that an efficient system of internal check can make his work easy and convenient. He should first of all examine the system of internal check, keeping in view the following points:

(1) He should call for a brief statement from his client in regard to the system of internal check in operation.

(2) He should examine the system in the light of the size and nature of the business to ensure how far the system can be good and efficient.

(3) Lastly, he should see how far the system has possibilities of errors and fraud and whether the system is totally or partially unreliable.

Normally, these tests can help him in making a real assessment of the internal check system and if it is not defective, the auditor can depend upon it. What is needed is that he should examine the system carefully and work with prudence and caution. It is, of course, true that a good system can be of much help to him.