Internal control system is of paramount important in any business enterprise. The following are the reasons why the system is important:
Enables management to carry out the business in an orderly and efficiently
Internal controls lay down the various procedures to be followed in conducting business transactions.
Ensures adherence to management policies
The controls lay down the procedures to be flowed in the conduct of business. In simple terms the management policies are explained through the internal controls
Safeguards the company assets
Internal controls are designed to ensure that the resources and assets of the company are protected from fraud, theft and embezzlement.
Ensures completeness of and accuracy of records
The companies’ Act cap 486 requires that the business enterprise must keep proper books of accounts besides financial statements
Helps in preventing and detecting errors
Strong internal controls assists in preventing and detecting errors. It is the responsibility of the management to prevent and detect errors. This is achieved through continuous review of the books of accounts such internal audits variance analysis etc.
Helps in compliance of the necessary legislation and regulations
Internal controls assists in ensuring that the business complies with applicable regulations and legislations.
Enables management to carry out the business in an orderly and efficiently
Internal controls lay down the various procedures to be followed in conducting business transactions.
Ensures adherence to management policies
The controls lay down the procedures to be flowed in the conduct of business. In simple terms the management policies are explained through the internal controls
Safeguards the company assets
Internal controls are designed to ensure that the resources and assets of the company are protected from fraud, theft and embezzlement.
Ensures completeness of and accuracy of records
The companies’ Act cap 486 requires that the business enterprise must keep proper books of accounts besides financial statements
Helps in preventing and detecting errors
Strong internal controls assists in preventing and detecting errors. It is the responsibility of the management to prevent and detect errors. This is achieved through continuous review of the books of accounts such internal audits variance analysis etc.
Helps in compliance of the necessary legislation and regulations
Internal controls assists in ensuring that the business complies with applicable regulations and legislations.
