Internal Control Procedures Implemented Services

What are internal control systems?

Reliable corporate entities that define red lines and prevent them from being crossed. They are in charge of keeping an eye on people in charge of the business, making accountable, and figuring out how they spend money. The internal control system keeps track of the board of directors activities and decisions, and it exposes wrongdoers to termination from employment and legal action. 

Internal control features:

Separation of employee responsibilities.

Each task must be distinct from the others, and two related job are not assigned to the same employee, especially if they are connected to the treasury, assets, or goods. This is one of the most crucial qualities that an internal control system must have. In most straightforward sense, it is improper, for instance, to entrust the same individual with the tasks of collecting cash, documenting it, and depositing it because manipulation and fraud are simple to pull off. 

Efficiency of those responsible for the internal system.

The skill of the staff members in charge of putting the system into action determines the integrity of the system. It is never a good idea to entrust the internal control to someone whose integrity is in doubt or who lacks trustworthiness. The administration must set rules for selecting internal control employees from them:

  1. The selection is based on particular qualities and characteristics, and the candidates who best meet these criteria are chosen. 

  2. To increase the effectiveness of employees assigned to internal control and foster their sense of responsibility, training programs and specialized courses have been implemented.

  3. Specifying requirements for internal control and consistently evaluating the performance of its employees, both directly and indirectly.

  4. Providing significant rewards and incentives to internal control staff to encourage them.

  5.  Turn on the employee rotation and job-transfer mechanism so that fraud and mistakes are caught and any manipulators or embezzlers are exposed. 

Defining and clarifying the functional structure:

Each employee's responsibilities and responsibility within the company must be clearly defined by the inter control system in order for him to be prevented from acting outside the bounds of his authority and to be held accountable for his action. In addition to creating opportunities for innovation and the growth of each employee's sense of responsibility, the establishment of a highly functional structure helps to improve relations between managers and their staff. I also significantly lowers costs and seeds up work performance and completion.

The accuracy of Organization's plans:

The Organizational plan clarifies the responsibility and authorities of each department as well as the method of coordination between each department, whereas the functional structure establishes each employee's responsibilities. This greatly simplifies the task of internal control as well as †he evaluation of each department and its employees performance.

Safety of documents and records:

Because internal control heavily depends on records and books, it is crucial that all firm operations and actions are accurately recorded in order to make it easier for control officials to spot mistakes and fraud.

Internal Audit Department's credibility:

One of the best practices to ensure the safety of the internal audit Department is that it is not afflicted with any department but, reports directly to the chairman of the board of directors. A sound internal audit can easily detect any deviations, which facilitates the matter for the internal control system.

Numerous goals of internal control, example:

  1. Make sure the work is completed accurately and effectively.

  2. Verify the financial statements accuracy.

  3. Encouraging staff members and individuals to follow the established rules and guidelines.

  4. Ascertain that the task is completed in accordance with standardized ethical guidelines.

  5. Preventing theft and embezzlement of institution finances and protecting the business from crises and losses.

  6. Giving board chairmen and business owners extremely accurate data and information.

  7. Achieving the business's primary objective, which is to boost profits.

  8. Inspecting how the company's funds are being used in the regions that have been assigned to them.

  9. Management of the items inventory, custody, and stores.

  10. Protecting the property of the company or the state from encroachments.

  11. Protecting the organization's records from being presented to irresponsible parties that do not have the right to do so.

Types of internal control system:

There are three different types of internal control, and the best type of depends on why the internal control is being formed:

  1. Internal control for protection and prevention.

    The control system is established here with the aim of evaluating the performance of the company's employees, raising their efficiency to the highest degree, and reducing or preventing errors from occurring before they occur. The control system of this type also aims to separate the duties and responsibilities of each worker and employee in the facility and to ensure the actual availability of assets and all information recorded in records and books.

  2. Internal detection control

    Aims to detect problems and errors as soon as they occur, records all calculations using double entry, prepares and reviews financial reconciliations and trial balances every month.