When it comes to internal controls for your business, it is important that they are designed in a practical, efficient, and effective way. Often times, it helps to have someone with a fresh set of eyes review your internal controls to make sure that they are still working as intended.
Internal controls are the policies and procedures designed to protect your assets, facilitate accurate financial reporting, and ultimately assist in achieving your mission as an organization. The emphasis of properly designed system of internal controls is on prevention rather than detection. The goal is to create an environment where fraudulent activity, such as financial misstatements or misappropriation of assets, is not only discouraged but is difficult to achieve.
A well designed internal control system includes the control environment, risk assessment, tests of the control activities, and oversight. Management’s commitment to competence, attitude toward reporting, and approach to evaluating and monitoring risks creates the control environment. Risk assessment considers the culture created by management, external relationships, industry factors, and the organization’s financial characteristics to determine which areas are more susceptible to fraudulent activity. Transactional data is tested to evaluate compliance with policies and procedures, and monitor controls. Most importantly, oversight should be provided externally by management and those charged with governance.
Our hands-on approach to internal control evaluation begins with a review of your process and procedures and an evaluation of your operations from a different perspective. We gain an understanding of current roles and responsibilities. We then assess your work flow to evaluate internal controls by identifying “who” initiates, authorizes, and records transactions; as well as, “how” they are recorded. We review job descriptions, segregation of duties, cross training opportunities, safeguarding records and more.