Internal controls, if proactively applied by an organization, can significantly assist an organization in achieving its objectives.
A thorough understanding of internal controls and how they create value is critical for any organization, regardless of size. It is the responsibility of management and the Board of Directors to effectively govern risk. An effective system of internal controls forms one of the foundations necessary to help an organization reach its full potential. For example, if an organization needs additional resources or capital, having a robust system of internal controls helps provide stakeholders with a degree of confidence. Evaluation of internal controls of current and potential vendors is increasingly becoming a key component of many organization’s vendor management program.
Leading practice internal controls change as the processes and technology that support an organization change. Risks posed to an organization are dynamic, and are subject to change over time as well. Additionally, it is key for an organization to find the appropriate balance of internal control. Given this changing and complex environment, many organizations hire internal control consultants to recommend the appropriate level of control for an organization, assess the organization’s design and operating effectiveness of internal controls, and develop systems to monitor, assess and update those controls.