Evaluating and Improving Internal Control in Organizations

Internal control is a crucial aspect of an organization’s governance system and ability to manage risk. It is also fundamental to supporting the achievement of an organization’s objectives and creating, enhancing, and protecting stakeholder value.
High-profile organizational failures typically lead to the imposition of additional rules and requirements, as well as to subsequent time-consuming and costly compliance efforts. However, this obscures the fact that the right kind of internal controls—enabling an organization to capitalize on opportunities while offsetting the threats—can actually save time and money and promotes the creation and preservation of value. Effective internal control also creates a competitive advantage, as an organization with effective controls can take on additional risk.
Despite the existence of sound internal control guidelines, it is often the application of such guidelines that fails or could be further improved in many organizations. With the publication, the Professional Accountants in Business (PAIB) Committee aims to provide a practical guide focused on how professional accountants in business can support their organization in evaluating and improving internal control as an integral part of its governance system and risk management. The guidance is complementary to existing internal control guidelines and is based on those internal control matters that often cause difficulties in practice.
The guidance helps to answer many key questions. i. What should the scope of internal control be? ii. Who should be responsible for internal control? iii. How should controls be selected, implemented, and applied? iv. How can internal control be better integrated into the DNA of the organization? v. How should the organization report on internal control