Why are internal controls important?
This might sound like an obvious question with an obvious answer to the risk and governance expert but a candid issue that many startups and existing small and medium sized companies alike grapple with. Sometimes the real hurdle is that a company or business owner does not know where to start, what really is required, what to prioritize and the implication on the bottom line of their company.
As an SME, you may be grappling with and wondering if you are;
- Complying with regulatory requirements.
- Having loopholes that are being exploited thus leading to fraud.
- Having unproductive business processes that could be deterring you from achieving your strategic objectives.
- Accounting for and reporting for all of your income streams and expenses.
A robust set of internal controls will therefore go a long way in ensuring that your above needs are being met, your company’s resources are well safeguarded, you are complying with regulatory requirements and inherent risks are adequately mitigated. Not only that, but you will also manage to free up your time to concentrate on your key objectives and your company will experience improved operational efficiency that will ultimately do good your bottom line.
Setting up and retaining an internal audit function can however be very costly for many business owners and company CEOs who often find themselves in a tight position having to design and implement controls through trial and error. However, don’t stress!! There are limitless options out there that you can explore for added value without seriously denting your pocket. You can reach out to an independent consultant or a firm that will offer services that meet your needs. These may include any of the following: designing a set of internal controls for your key processes (policy and procedures), reviewing the existing internal controls to give assurance on their robustness, co-sourcing the internal audit function whereby your consultant will step up to give specialized services in key areas to supplement your existing audit unit. You can also fully outsource the internal audit function to a consultant who will deal with all of your worries. And trust me, you will find a consultant that meets your budget!
Finally, I hope this article sheds some light to a business owner or CEO for an SME out there on how to handle their internal controls situation. Step up and advance your business and all the best at it!!