Internal Controls
Companies need to be aware of the varying influences that are acting upon their organization. One method of examining the current situation is to divide the perception into ideas and influences that are arriving from the external environment and those that are internally controlled. Internal controls are important because they rely on leadership, courage and skill for these actions to take hold. The purpose of this essay is to prepare a comprehensive checklist for evaluating controls. The essay will use Louwers et al. (2007) basic five tiered framework to create this checklist and ensure that it can indeed be used for practical and pragmatic purposes at the internal business strategic level.
The checklist is divided into 5 distinct sections: Control Environment, Risk Assessment, Control Activities, Information and Communication, and finally, Monitoring. Each component of this checklist plays an important role in ensuring that a company or organization is on the right track in controlling their internal environment.
Part 1: Control Environment
The first part of internally controlling an organization is to get a firm grip on the business' environment. This would include such things as the ethics, integrity, leadership philosophy...
Internal controls are "methods put in place by a company to ensure the integrity of financial and accounting information," and to protect the organization's assets from misappropriation by internal sources (Investopedia, 2013). Internal controls help to prevent fraud, but they also allow the company to have reliable data on all transactions, which can be used for any number of control purposes. Further, internal controls promote operational efficiency and they encourage adherence
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