What Are Internal Controls
Internal controls are the policies, procedures, and systems that organizations use to safeguard assets, ensure the accuracy of financial information, and promote operational efficiency. This article explains why internal controls matter and how to strengthen them.
Why They Matter
A sound system of internal controls reduces the risk of fraud and error, gives management reliable information to base decisions on, supports compliance with laws and regulations, and builds the confidence of investors, lenders, and auditors in the business.
Common Weaknesses We Observe
Across the businesses we work with, the most frequent control gaps involve a lack of segregation of duties in small finance teams, informal or undocumented approval processes for payments and expenditures, insufficient review of journal entries and manual adjustments, and inconsistent access controls over financial systems.
Strengthening Your Control Environment
Improving the control environment typically begins with documenting key financial processes and the controls within them, introducing appropriate segregation of duties where feasible, establishing clear authorization limits, and conducting periodic internal reviews to test whether controls are operating as designed.
How We Can Help
Our audit and advisory professionals can assess your current control environment, identify priority gaps, and help design practical controls suited to the size and complexity of your business.
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