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Internal Controls

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal controls as the following:

Internal control is a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

  • Effectiveness and efficiency of operations
  • Reliability of financial reporting
  • Compliance with applicable laws and regulations


A successful internal control environment should allow an organization to achieve consistent, timely and useful information. The design, implementation and monitoring of the internal control system is crucial to the overall success of the organization.

Process:

An internal control system should really be thought of as a process and not just a set of procedures or manuals that create a solid environment. The documentation is important and essential, but the real influences are the people and how they impact the control environment. A system that is well planned and thought out must still be tested and updated for the changing business operating environment.

No two organizations are alike when it comes to how their particular control structure is or should be designed. At the end of the day, however, it is the functionality is what is important.

Recent client projects which included internal control structure design, review, or modifications include:

  • Start-ups
  • New software system
  • Expanded business offerings
  • New locations
  • Changes in the regulatory environments
  • Improved financial reporting

In each case, we adjusted our approach to fit the unique needs of our client. Designing an Internal Control System is no small undertaking. We believe all the safeguards, polices and procedures in the world will not do a bit of good, if the organization cannot productively conduct business. 




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