OTHER SERVICES – Internal Controls – Business Ethics – Business Continuity Planning

Internal Controls

Our goal is to help our customers’ organization put in place and maintain a strong and leverageable internal control program. Internal controls are an integral part of the entire cycle of planning, budgeting, forecasting, management, accounting and auditing. As such, we take time to understand how our customers’ organizations work, identify the challenges and work to determine a solution based on our customers unique needs. We create a custom solution as there is no solutions which fits all so therefore we are determining the best control structure for our customers environment based on their needs.

An internal control is a set and the integration of instructions, guidelines, policies, activities and procedures that a company’s senior leadership establishes to prevent operating losses resulting from theft, error, technological malfunction, employee neglect or carelessness etc. An internal control also helps a company prevent adverse regulatory initiatives, such as fines or litigation.

Internal control refers to the measures and methods which are built to the different levels of the organization, which consist of a number of areas, such as authorizations, business processes, tasks, as well as controls of accounting and control systems, functionality of business processes and their controls. Internal control is always different in different organizations and is affected by, among other things, the company’s size, ownership, structure, industry and the nature of its activities. In general, the internal control is a very sophisticated process, especially in large international companies. The most important thing is not the way how internal control is organized, but the way how the internal control works. The ultimate goal of internal controls is the fact that the company’s reported numbers are correct, and investors can rely on the published financial information.

Based by the definition of APA-association (Authorized Publics Accountants) Internal Controls are the set of policies and procedures which are designed to assist and ensure that management’s objectives are met appropriately and effectively. Aims include to follow management’s operating principles, searching irregularities and errors and detection, accuracy and completeness of accounting records and reliable financial information for the timely production. The internal control covers also to the relevant outside matters close to the accounting systems.

In addition to the internal control also the concept of internal audit is linked to this control process. Internal audit is part of the internal control system. It normally refers to an independent audit organization, whose activities can vary by organization. In the professional standards of internal audit, it’s nature of the work is defined to control and audit risk management, processes, management and administrative systems. Internal audit can be outsourced almost completely, or it can be a separate unit within the organization. Internal audit differs from internal control in a way that the internal audit reference to the actual inspection activities, while the internal control aims to be a part of the organization’s daily activities. Internal audit is often subject to audits of internal control. Of course, depending on the structure of the organization internal audit function can be very broad covering audit functions, the responsibility for the internal control maintenance and control development. Internal control should always be part of the organization’s normal processes.

The individual process steps may be called the term control. A good example is the purchase process that begins from selecting the supplier and ends to do the payment of the invoice. This process may include for example the following controls; vendor selection, contract and archiving, purchase order approval, goods receipt, invoice approval and payment. Other processes may be the sales process, the manufacturing process, the procurement process, as well as the accounting and reporting process. In addition, internal controls exist also in HR, IT and Treasury operations. Also the internal control environment is often mentioned in the discussions and texts, which refers to enterprise-level controls, such as organization’s code of conduct, internal audit function and for example common accounting principles.

There are many forms and levels in the internal control. Most of them are built into the organization so that the performer not even think about carrying out a specific control. Existing control descriptions and guidelines do not guarantee anything yet. It must be confirmed that the actual processes in practice works in accordance with guidelines. In practice, the internal control is effective when the controls are working. To ensure this there have to be control process which monitors internal controls in practice. Result of the evaluation will provide information on whether the controls as intended.

The evaluation of actual practices is often compared to the documented practices. As a basis for the comparison can be used written policies, process charts, job descriptions and control matrix’. The assessment may also be made by comparing the existing practices in the field to the best practice or generic control descriptions. Separate evaluations can be classified on the basis of who and how assessment is carried out and how objective examination is. Traditionally internal control is audited by external or internal audit. Gradually the self-assessment has taken foothold as an evaluate method in internal control.

Internal Controls – corporations listed in US Stock Exchange

Internal controls is a process for assuring achievement of an organization’s objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.

It is a means by which an organization’s resources are directed, monitored, and measured. It plays an important role in detecting and preventing fraud and protecting the organization’s resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks).

At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction level, internal control refers to the actions taken to achieve a specific objective (e.g., how to ensure the organization’s payments to third parties are for valid services rendered.) Internal control procedures reduce process variation, leading to more predictable outcomes. Internal control is a key element of the Foreign Corrupt Practices Act (FCPA) of 1977 and the Sarbanes–Oxley Act of 2002, which required improvements in internal control in United States public corporations. Internal controls within business entities are also referred to as operational controls.

For more information on how can we help your company and organization on Internal Control matters, please call us or email to schedule a meeting.


Business Ethics

Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may choose to follow to gain public acceptance.

Business ethics ensure that a certain required level of trust exists between consumers and various forms of market participants with businesses. For example, a portfolio manager must give the same consideration to the portfolios of family members and small individual investors. Such practices ensure that the public receives fair treatment.

The concept of business ethics arose in the 1960s as companies became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes and corporate responsibility. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally versus maintaining a competitive advantage over other businesses. Firms manage business ethics in several ways.

For more information on how can we help your company and organization on Business Ethics matters, please call us or email to schedule a meeting.


Business Continuity Plan

Do you have an answer for a question: “Would my business survive in a crisis?”

Business continuity planning and testing verifies that the business recovery strategies, procedures, personnel and processes meet the business continuity requirements.

An effective Business Continuity Plan will minimise any disruption to your clients, employees and your business.

Continuity Planning will ascertain a company’s susceptibility to potential threats. It includes a practical system for effective prevention and recovery at a time of crisis, while minimising operation impacts and maintaining the business’ competitive advantage. In essence, the plan should permit companies to continue to operate business as usual.

While companies may expect to have a business continuity plan for a major event or for a specific project, the plan should not be focused on just one event. The plan is designed to sustain the future of the business, beyond a specific crisis period.

Smaller businesses, who has lack of the resources to manage a crisis, business continuity planning and crisis management is even more important.

Important matters companies should review

Business Continuity Plan includes the following areas

For more information on how can we help your company and organization on Business Continuity Plan matters, please call us or email to schedule a meeting.