Internal control: protective shield of the business

In today's rapidly developing economic integration trend, increasing competition and risks greatly affect the manager's ability to achieve the goals. Therefore, building and applying effective internal control (KSNB) is very important task.

What is internal control

Internal control is the process performed by the Board of Directors, management, managers and other employees and is designed to provide reasonable assurance to achieve goals. of the business such as: Business efficiency and efficiency; The truthfulness and reliability of the Financial Statements (Financial Statements); Compliance with applicable laws and regulations.

Internal control of a process, not just a procedure or a policy, is implemented at certain times, but is operated continuously at all levels of the business. Designed and operated by people who set goals, set up control mechanisms everywhere and operate KS systems.

Internal controls provide a reasonable reassurance that mistakes can be prevented and detected but cannot be guaranteed that they never happen, since there is always a possibility that weaknesses stemming from mistakes exist. human mistakes in operating the control system, leading to failure to achieve goals. Furthermore, a fundamental principle in management decision-making is that the cost of the control process cannot exceed the benefits it provides. So internal control can only reasonably guarantee that goals will be fulfilled, not absolute guarantees.

For financial statements, internal control must ensure the integrity and reliability (the unit manager is responsible for preparing the financial statements in accordance with current accounting standards and regimes). and all other relevant laws. Financial information provided outside the company must be reliable, as a basis for making decisions and evaluating the business situation of the business.

For compliance, internal control must first of all ensure reasonable compliance with laws and regulations. Internal control must also direct all members of the unit to comply with the internal policies and regulations of the unit to ensure the achievement of the unit's objectives.

For the purpose of efficiency and effectiveness of operations, internal control helps the unit protect and use resources effectively, keep information confidential, improve reputation, expand market share, the unit's business strategies.

Can be briefly understood: Internal control is all the measures of the manager to ensure the goals of the unit are fulfilled.

Internal control of the Financial Statements

Many businesses are still thinking that auditing financial statements is only used to pay taxes as required by current regulations without having to perform strict inspection and supervision. The Board of Directors does not pay much attention to the recognition that the financial statements must comply with the current accounting standards, the corporate regime, but only interested in tax return, this is not consistent with reality as the business development target.

Financial statements of companies are documents assessing the financial situation as well as providing necessary information for investors, creditors and regulators ... interested in the financial situation of the company. . Therefore, an honest financial report is especially important. However, except for listed companies, large-scale companies that are required to build a Board of Supervisors, what do the remaining companies need to do to achieve this goal.

  • Develop and implement a mechanism to review the specific internal control system of an enterprise: Methods and policies designed to prevent fraud, minimize errors, encourage performance, and achieve compliance with the policies and procedures established for your own business. according to each level;
  • Conduct a financial information review: prior to making external information assisting management in preparing and presenting financial information in compliance with the applicable financial reporting framework;
  • Reviewing financial information periodically: have a method of periodically managing and monitoring accounting books (monthly / quarterly), ensuring financial information is fully and promptly recorded, in compliance with legal regulations and corporate regulations;
  • Continuously update legal changes: from there, there are adjustments to management processes, financial information presentation, as well as avoiding risks from not keeping up with changes in legal documents.

In case the enterprise still has no experience in internal control and review, it is possible to use internal audit and compliance audit services to help identify and evaluate to minimize risks as well as provide relevant advice, suitable to the size and development situation of the business.

Huge benefits from using internal audit services - the shield of the business

  • Ensure the accuracy of accounting data and financial statements of the business;
  • Reducing the risk of errors and frauds affecting financial information;
  • Control the risks of non-compliance with the business policies and processes of the business such as tax risks, risks of administrative violations;
  • Timely detect risks from inadequate management.
  • Professional accountants and auditors are not affected by the "familiar" factor, giving independent and objective results for documents, reports or financial information containing errors. material or deficient information.
  • This service is beneficial when it comes to assisting management in making critical judgments or handling technical problems with financial information;
  • Give advice on problems that the internal control of the business has not yet overcome and the future system orientation.
  • Reduce the pressure as well as the cost when building an internal control team to immediately meet the management requirements;
  • Less concern for the accounting department when there is no other party to help review and supervise the implementation.

In short, internal control is essential for achieving your business goals. Not only long-term or large-scale businesses need internal control, but even small, newly established businesses must understand the importance of this work. With a good internal control system, using an effective internal audit service will help business managers maintain stability, confidence in data in particular as well as ensure the position of the business. in active sector prior to third party partnership opportunities.