A company’s processes can be one of the most crucial parts of a business’ plan. In accounting, there’s a process called “internal control” that analyzes an organization’s productivity, financial reporting, and compliance with regulations. It’s a broad definition, but internal control itself is a broad and integral measure—especially for detecting and preventing fraud.
What is Internal Control?
In a business, internal control chiefly concerns the reliability of financial reporting, the documentation of operational goals, and compliance to regulations. Implementing internal control into a business helps in reducing process variation, which in turn can lead to more efficacious planning on business side.
Internal control can also be integral for detecting fraud, and other scenarios where theft or loss may occur. It can minimize risk in a way that may prove crucial for some businesses. Typically, internal control can manifest in three common methods:
Designing controls to run more efficiently and effectively can take a number of forms—such as, automating those controls that are currently manual. One pitfall of some businesses is that they view internal control exclusively as a measure to prevent fraud, instead of how it can be used to streamline processes.
Because internal control can take so many forms, it can sometimes be intimidating to design. You can trust the experts at Atherton & Associates, LLP to help you with your internal control needs.