Enforce Internal Control

What is internal control?

Internal control is vital to protect the company from mistakes and fraud. A business will not be able to survive in the long run or grow if internal control is not enforced. Every business needs internal control as any company is targeted for theft. Suppliers intentionally ship fewer goods than in the order; shoplifters are there to take your stock away with them when they walk from the shop. Unfortunately, some owners do not realize all this until it happens. They also do not understand that these can be stopped by introducing proper accounting systems. These internal controls are specially designed to minimize bookkeeping errors that contain employee fraud.

Examples of internal control

• The business requires a second signature for cash withdrawals from the bank.
•  Check and match the supplier’s invoices with the order and the goods received before payment.
• Writing off the bad debts should be approved by the manager and a high-level authority.
• Stock control – An employee or an auditor doing surprise counts of the stock in the company warehouse and match with inventory records.
• Require mandatory leave for the person doing the books, including the bookkeepers and accountants. Another person with accounting knowledge is allowed to do the same work. Therefore, that work helps in finding the irregularities in the company policy.

Many small businesses believe they are secure because trusted people run them. But it is no harm in enforcing internal controls in the event of fraud and doing the daily balancing and checking to avoid the practice of dishonesty.

Complete with period-end procedures.

You are ready to prepare the financial statements if all the transactions are entered correctly. But you have to do some more work to get prepared. For example, the equipment in your business needs to depreciate, and the values are included in the final accounts. Further calculations for accruals and prepayments also get involved in the reports. Thereby lots of last accounting work has to be done to arrive at the accuracy of the accounts for the period that is required for the company.