“Ask the Expert” About the Rice University Office of Internal Audit February 2013
Have an internal control expert reduce the risk
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Have an Internal control expert reduce the risk for your business What leads to the problem? Managers in most organizations come under numerous demands. An enormous challenge awaiting them is attracting new business. Other challenges include quality delivery and administration. One other challenge that carries enormous consequences but is generally over looked is effective system of internal control. The problem is that very often too much of reliance is placed on trust. This is the leading problem behind frauds, inappropriate allocation of resources, bad decisions and improper reaction to errors.
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Transcript of Have an internal control expert reduce the risk
Have an Internal control expert reduce the risk for your businessWhat leads to the problem?
Managers in most organizations come under numerous demands. An enormous challenge awaiting them is attracting new business. Other challenges include quality delivery and administration. One other challenge that carries enormous consequences but is generally over looked is effective system of internal control. The problem is that very often too much of reliance is placed on trust. This is the leading problem behind frauds, inappropriate allocation of resources, bad decisions and improper reaction to errors.
What is internal control?Internal control refers to the procedures and processes that any organization has in place for safeguarding the assets while enhancing the accuracy and reliability of finance information. It is also necessary for complying with the legal and financial obligations. Smaller organizations face challenges in implementing controls. This is because achieving the task with a small team can be difficult.
Ensuring effective internal control through an expert
An effective internal control can be easily ensured with the help of an expert. The expert will start by tuning the tone of the top employees of the organization. This is because the managers and the owners have to demonstrate a strong commitment for ethical behavior while supporting the operations of controls. Specific codes of conduct need to be established and communicated to all the members of the business. These members also need to be engaged in employment agreements. This is needed as the hiring process should go through careful consideration and be open to references and background checks.
The business controls and processes need to be clearly defined and documented. This would serve not only towards supporting internal control but also act in training the new staff. This way value would be added to the organization. It will also serve to reduce the risks associated with the departure of one or more key employees of the business. An effective way of identifying the key controls is thinking about what could possibly go wrong. After that some practical steps need to be identified that would prevent the onset of problem.
These are a few of the many important ways in which an internal control expert would ensure quality internal control. An expert’s assistance would do wonders in establishing an effective environment. It will also make sure that your controls happen to be practical aside from supporting efficient business operations. They would also be cost effective. However, you should know that the risks will not be entirely eliminated.
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