When talking about
management systems; it should be known that a management system is not A
software. A software is an application a tool used to make the system more
efficient.
The ability to design,
implement and MAINTAIN effective internal controls are attributes of successful
CEOs, MDs and chairmen of boards.
Control systems are an
indication of effective management inaction. It creates a sense of orderliness
and project high levels of integrity which is the most desired characteristic
by financiers, suppliers etc..Dynamic people or organizations who you would
like to associate with as business
partners or donors can be easily
attracted to your enterprise.
Internal control systems
are the measurements put in place to not only capture useful Accounting and
Financial information but also safe guard the organisations resources from
theft , misuse, fraud, Tax liabilities etc…
These (measures) will
increase accuracies and quality in record capturing and processing, resulting
into well kept records and properly written books of account.
These measurements act in
the following manner;
- Preventive(Authorizations)
- Detective (Audit trails)
- Detarent.(Penalty and Fines)
- Finance and Accounting information control system
- Fixed assets control system
- Store/Inventory management system
- Procurement management system
- Sales and distribution system
- Marketing and advertising management system
- HR-management system.
Large companies should have all the
above systems very visible and fully operational while for smaller
organisations including one man companies, the relevant
systems can be selected and incorporated into its management.
Benefits
of internal control systems;
1. Effective introduction of spouses and family members. Though the collapse of many enterprises has been
attributed to poor inclusion of family members and relatives by owners.
Internal control systems will help create well defined roles and
accountabilities for family members to be productively incorporated into
management NOT as spectators but as equal contributors to the
organisation’s success and continuity.
2. Control systems enable entities write
PROPER BOOKs of accounts resulting into generation of accurate and realistic
reports about events that have or have not taken place from within therefore,
helping decision makers to analyze and assess its consequences to the organization
in the short and long run.
3. Decision makers will be at a better
position to effectively implement their strategies. They will be able to see
future threats, and take decisive actions to correct problem areas that are
hindering growth and, or realize areas or activities that are responsible for
the observed success and profitability.
4. Organisations with good internal control
systems will easily qualify for accreditations like ISO, Authorized Economic
Operator certifications, World Economic Operator certifications etc...
5. Accredited companies, firms and organisations stand out as trusted entities for strategic partnership with government, private sectors, donors, individuals and foreign companies.
Partnerships at this level of trust will see them enjoy
exemption status, Tax waivers in failed business ventures, Better credit
facilities and terms from financial institution such as Banks, Venture
capitalist, suppliers especially foreign suppliers.
A local company with effective control systems will be highly
favoured when seeking exclusivity as a distributor for products from foreign
companies looking for markets in this economy.
An internal control system is built on three pillars Process, procedures, people and Technology.
A system is an established way of accomplishing tasks through
activities undertaken in day to day management. These activities should be
guided by laid down procedures which are within the perimeters of standards
determined by the regulatory authorities like Revenue Authorities, Registration
Bureaus policies and academia e.g ISA,IFRS,ISO etc…
MORE BENEFITS OF INTERNAL
CONTROL SYSTEMS
a) Control systems help form Departments
in organisations
Take
an example of activities that follow a process of how stock is acquired from a
supplier, entered in the store shelved and how it exits the store to the buyer.
Now, you will notice that
the activities in the process
described above can be grouped into departments ie procurement department, store/inventory
department and sales department. Each department will therefore perform these
tasks according to prescribed procedures
that will capture critical data that is latter processed into good information to
generate reports for analysis.
b) Control systems help create Audit
trails;
The
report and data captured about each process will leave behind footprints known
as an Audit trail. An audit trail is
data captured at each stage of an activity as evidence that the event occurred.
These records can be used to reconstruct the series of events that have
transpired over time. These audit trails are VERY important during Audit to check on accuracy or arrest bad
practices.
An effective system is
assessed on the quality of data capture and the quality of reports it generates.
c) Control systems help create effective
job descriptions;
Segregation
of duties is a critical part of a good control system. The level of segregation
of duties will determine the level of control of risk to fraud and accuracy of
information. When segregating duties, caution should be adhered to in order to
avoid over staffing leading to redundancy or duplication of tasks.
The complexity of each
system will depend on the size of the organization, the nature of its business
and the business model the organization has chosen. Virtually all these systems
can be out sourced completely or Partly.
BUILDING A SYSTEM
A
system is not built over night it goes through series of adjustment up until
its perfected. With commitment from owners and top management to put it in
place, our team of trusted professionals can help you significantly reduce the
period of designing and implementing an efficient working internal control
system for your firm, company and or Organisation.
Inspite
of all these benefits most firms, companies and Organisations have failed to
build efficient working internal control systems.
We JW & PARTNERS have the professional
skills in this area and can help your firm, company or Organisation (NGO) to
Design and implement efficient working control systems.
If
you’re interested, Sign up for this service that we are offering to you.
Call
or write to us; For inquiries write to jwauditors@gmail.com,
for serious business write to jwandpartners@gmail.com
or call The Director Business Advisory Mr Omony Patrick on 0772 564808, The
firm’s Managing Partner Mr Ochola John 0704 024835 office line: 0414 256408
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