Internal Control

Internal Control
Name
Institution Affiliation
Internal Control
Importance of Internal Control
Internal control is a set of policies and procedures that are employed by the management of a company (Brookins, 2018). The policies are put in place to facilitate achieving specific goals which include: safeguard asserts through protecting them from loss through fraud, ensure financial reports are reliable and accurate. Furthermore, internal control policies ensure that a company complies with state or federal laws and regulations that govern and affect their line of operations (James, 2018). It also creates an environment where managers and employees can boost their efficiency and effectiveness in their work to facilitate goal and objective achievement.
Why Internal Control Is Available in a Company
Internal controls are primarily aimed to establish ways in which a company deals with receiving and reporting cash usage, administrative and management tasks. The primary purpose for establishing internal control include setting out the protocol to be followed by employees to bring order and cohesion in the organization (Brookins, 2018). Secondly, it is a measure to curb fraud and theft because through internal audit misallocation of funds can be detected. Third, it facilitates separation of employee’s duties via having system checks. Additionally, internal control helps a business to keep their financial and management data organized (James, 2018). Organized information enables reducing errors, and thus the company can save cash and safeguard their reputation and brand.

Issues Preventing Companies from Having Internal Control
Internal control is essential for any business. However, some of the businesses do not have these control because, they have a limited human resource to enable task separation, lack of clear and effective policies and procedures to align company’s objective (James, 2018). Furthermore, some companies do not maintain adequate supporting documents that form the base for internal control framework in an organization.
Have you ever been an external user of the financial statement?
I have ever been an external use of the financial statement. As an employee am interested in profitability and stability of a business to determine the ability of the business to pay salaries, its existence and operation stability. I primarily aimed to determine the financial position of the company and its performance which will enable me to assess the company’s likelihood to expand and create career improvement opportunities. However, the financial statement in the company was not adequately recorded because they lacked opening and closing reports and thus some completed transaction was not recorded. Hence, a detailed decision was not possible.
References
Brookins, M. (2018). What Is the Purpose of Internal Controls of a Company? Retrieved from http://smallbusiness.chron.com/purpose-internal-controls-company-12116.html
James, K. (2018). Purpose of Internal Control.