Save Your Company Thousands, Perhaps Millions with a Set of Internal Controls!
Whether you’re the owner of a small- or medium-sized company, it’s in your best interest to create an internal environment that operates with integrity and order to prevent unwanted thefts and basic employee mistakes. A significant number of small businesses fail yearly due to the lack of good business plans or they do not identify and control risks that could have been avoided. By establishing internal controls, you can increase your company’s chances of success and growth.
We’ve all read articles in the newspaper or heard reports on the nightly news regarding accounts of small businesses being robbed blind for hundreds of thousands of dollars by trusted employees who were stealing small amounts of money over a span of years. And how did they accomplish such a feat? Usually by being responsible for too many tasks without being reviewed or checked by management, such as receive invoices, write checks and make journal entries.
Internal controls consist of your company’s method(s) of reducing any potential risks that may harm its ability to operate at its intended level to meet objectives. Examples of internal controls would be (1) reconciling your bank statement, (2) reviewing bills and credit card statements before paying them, (3) dividing these responsibilities among authorized personnel, and (4) verifying transactions after they’ve been recorded and documented.
Effective internal controls create an environment that helps prevent an employee from committing fraud, eliminate potential fines and penalties that could arise from a regulatory agency due to non-compliance with laws and regulations, and spot potential financial recording errors before they occur or before they get out of hand. These controls can also create a sense of integrity and loyalty among employees within the company following the example of management, as well as improve or increase relationships with lenders and vendors.
Developing efficient and effective internal controls can assist your company with meeting various goals in an accurate and timely fashion, which will allow you to focus on the vision you’ve set for your organization. Let’s get it!