The Importance of Internal Controls

What is the importance of internal controls for a business?

Internal controls are important to the success of every business. In brief, internal controls are a set of prudent and best practices put in place by management allowing businesses to successfully achieve three objectives:

(1) Production of accurate financial reporting

(2) Compliance with all rules and regulations, and

(3) Efficient organizational operation capability.

Every business, irrespective of size, benefits by implementing effective internal controls. The implementation process is not a one-size-fits-all. However, once assessed, controlled, with proper communication channels, and monitored effectively, the benefit will be a lessening of losses and higher profits. Just the stuff a business is supposed to be made of.