(13)What are the limitations of Internal Control Systems?
Answer: Internal control systems are subject to certain
inherent limitations which
are listed below:
(1)Cost of Internal Control: Absence of relevant data to ensure
that cost of control do not exceed cost of expected benefit.
(2)Human Error: Chances of human errors such as mistakes,
negligence, carelessness and misunderstanding.
(3)Unusual transactions: Internal controls do not tend to address
unusual transactions.
(4)Collusion: Collusion within employees or other parties can
override internal controls.
(5)Abuse of Responsibility: Abuse of responsibility by staff responsible
for exercising an internal control.