Internal control: Why it matters to everyone
Think of internal control like the brakes and steering in your car. It's not just for accountants or managers; it's something everyone should care about.
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Just like how good brakes keep you safe on the road, strong internal control helps keep a business running smoothly and safely. It's all about making sure things are done right and risks are managed well.
What is Internal Control?
Internal control is a set of rules and practices that help a company achieve its goals, protect its assets, and make sure everything is done correctly and legally.
It's not just about preventing fraud or theft, although that's a big part of it. It's also about making sure that the business runs efficiently and effectively.
Why should you care?
1. Job security and performance: When a company has good internal controls, it tends to be more stable and successful. This means more job security for you and opportunities for growth.
2. Protecting assets: Think of the company's assets like your own belongings. You wouldn’t want someone to walk away with your stuff, right? Internal controls help protect the company’s assets, which indirectly protects your job and benefits.
3. Accuracy and reliability: If you work in a place where data and reports are important, you know how crucial accuracy is. Good internal controls ensure that the information you rely on is accurate and reliable.
4. Compliance with laws: Every business has to follow certain laws and regulations. Internal controls are what keep a company on the right side of the law, avoiding fines and legal troubles.
Examples in everyday work
- Approval Processes: Ever had to get a manager's signature to spend money or make a decision? That's an internal control to make sure spending is necessary and appropriate.
- Regular audits: Think of audits like a health check-up for the company. They help catch problems before they become serious.
- Separation of duties: Ever wonder why more than one person is involved in handling money or making key decisions? It's to ensure that no one person has too much control, reducing the chance of misuse or fraud.
- Access controls: Just like how you have a password for your phone or computer, companies use access controls to protect sensitive information and systems.
Everyone's role
Internal control isn't just the job of managers or the finance team. Everyone has a role to play:
- Stay Informed: Know the policies and procedures of your company. Ignorance isn’t an excuse!
- Speak Up: If you see something that doesn’t seem right, say something. It’s better to raise a false alarm than to ignore a real problem.
- Follow Procedures: Even if they seem tedious, these procedures are there for a reason. Following them helps keep everything in order.
- Continuous Learning: Be open to learning about new policies or changes. The world of business is always evolving, and so are the risks.
Conclusion
Internal control is like the immune system of a business. It's not just a concern for the "higher-ups." It affects everyone, from the newest employee to the CEO.
By understanding and participating in internal control, you're not just helping your company; you're helping yourself to a more secure and rewarding work environment.
So, the next time you encounter a procedure or a policy, remember it's there for a reason, and it's part of what keeps the business – and your job – safe and sound.
The writer is a member of the Institute of Directors, Ghana and serves on a number of boards. He is an independent Internal Audit Advisor, Enterprise Risk Management Consultant, Board Consultant, and professional trainer.
He is the founder and Chief Operating Officer of Redric Consulting, your trusted partner for comprehensive training and consulting services in the fields of Governance, Risk, and Compliance (GRC).
With a proven track record in Board Consulting, Internal Audit, Internal Control, Compliance, Fraud Risk Management, and Cybersecurity, Redric Consulting empowers your organization and ensures its success.
You may reach out to Frederick on [email protected]