Internal Control Exercise
We would think it utterly ridiculous if there are an organization or group of people who set out upon a project and aimed to fail. In fact most groups of people set out to succeed in what they do. That said, we are also aware that only a few actually reach their goals of success. The question at the end of the day is, what sets these groups apart? What allows them to thrive and grow? And what are the means by which resources are allocated, measured and monitored? These systems that are in play and make all of the difference are often referred to as “Internal Controls.” For this paper I will be defining exactly what internal controls are, explaining their purpose and then looking at personal experiences in which internal controls were utilized effectively and when they were improperly implemented.
Internal controls are established systems or procedures created to help attain the objectives of an organization's mission. Effective internal controls assure the implementation of policies, avoidance of fraud and most of all the promotion of efficiency (University of Washington Finance & Facilities). Most internal controls can be classified into two groups: Detective and Preventative. Detective controls flag questionable incidents after the fact. One of the most obvious examples of detective control systems is the accounting practice of reconciliation in which one goes back to look at a previous time period in order to detect errors. The second group, Preventive controls, goal is to deter those unwanted incidents from occurring in the first place. This is often done through documentation, communication and authority flows (University of Washington Finance & Facilities).
It is commonly accepted that the measures an organization puts in place are vital to protect one's financial and management data. Several common purposes of establishing internal controls for a organizations exists; each with a...