Internal controls are the policies, procedures, physical safeguards, and checks and balances designed to protect and conserve company assets from waste, spoilage, theft and damage. They consist of a comprehensive system permeating the organization.
In most companies, internal controls are processes affected by an organization’s structure, work and authority flows, people and management information systems. They are designed to help an organization accomplish specific goals or objectives. It is a means by which an organization’s resources are directed, monitored, and measured.
Internal Controls play an important role in detecting and preventing fraud while protecting an organization’s resources, both monetary ( cash, receivables, investments ) physical (e.g., inventory, machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks).
Many small businesses have poor or sub-par internal control systems. As a result they are prone to loss from a variety of factors. The business advisor can dramatically improve performance by helping implement good internal controls.
Field of Study