Internal controls run any business and their impact is felt and it ensures that you always get the legal and reporting requirements. Having a good system of operations provides you and the executive team, with certainty that the objectives set will be reached in all conditions. By establishing consistency through operations, internal controls help you from theft and fraudsters, who are all around nowadays. There are many cases where lack of adequate internal controls has led to the downfall of an organization, so keeping this area in the best form is very important. Having a long view and oversight of procedures mitigates risk and improves mutual accountability at the same time, which develops the company.
It doesn’t matter whether you are a big or a just begun organization, the word audit wouldn’t be a good one to you. The employees certainly have a fear on the audit day and they never stand up straight, sending shivers down the line. The failure due to it differs in both smaller and larger companies, unchecked human error has been the major cause most of the time. So we have some tips to develop good internal controls and be in better shape during the auditing time.
Detailing/ separating duties for employees makes your work easier and faster, as everyone is assigned a particular task. It might be preparing financial statements, transaction processing, and various other responsibilities that run an organization. This happens when the company relies on few key employees to perform numerous tasks which creates problems later. These varied responsibilities give opportunities for theft and fund misusage to employees. The bookkeeper is responsible for entering bills and pays company bills too. In this, they could input vendors who are false and siphon the company funds. So separating duties is the best option!
Every company will surely benefit from this habit, as companies who have followed it have gone heights. It can range from recording clearing policies to the deadlines of financial statements. If your staff has confusion or shows inconsistency in critical procedures, it is the best time to record the steps. When you deal with payments and checks make sure that you sign or approve them before passed on, and not your bookkeeper. This move makes sure that you keep a check on all your payments for the very important safety factor.
Even the best system and internal control are meant to be modified if the industry is changing, that’s the only option. But if your management team is unaware of problems, it causes unnecessary troubles that threaten operations and compliances too. This highlights the importance of collaborative communications between stakeholders as well as management teams.
This is the most important step in developing internal control as considered by many, monitoring controls can create wonders! Reviewing statements regularly ensures accuracy and examining checklists detects various discrepancies. Having a routine check-up helps you easily spot various inconsistencies and makes you take action towards them. Improving the internal controls is the key to growth and improves the performance of your organization drastically !!
So follow these tips and rise once again with your team to show the market what you and your company are capable of !!