Not all businesses are required to adhere to an internal control framework, but organizations of all types can certainly benefit from implementing better controls. Every significant process within your organization has the potential for things to go wrong, meaning there is risk just about everywhere. Making and documenting a plan to mitigate those risks — a.k.a. controls — will make your company stronger.
Using a five-step plan for process improvement will set your company on the right track. It doesn’t matter if you want to review a typical accounting process, such as accounts receivable, or if your concern is an operations process documenting activity on a factory floor. Every process can use these five steps.
While the risk assessment process can seem daunting when you look across your entire organization, what’s important to remember is that you do not have to implement internal controls for all aspects of the business at once. Since you may not be required to have certain controls in place, you can focus on manageable sections that make sense for your business, your time and your most pressing needs.
Start with your biggest problem area (what keeps you up at night?). If it’s the sales process, then prioritize that before moving onto your next issue. Assessing internal controls is about problem solving. All businesses have issues, and therefore risks, even if it may not seem like it on the surface. It will take a well-documented process to identify those risks so you can see the overall picture. Then the controls you and your team put in place become the solutions to help mitigate those risks. Tightening up your internal controls in your most important areas of the business will help you gain efficiencies and help prevent errors or fraud, which can be costly. Remember, not identifying the issues doesn’t mean your company doesn’t have concerns; it means you aren’t prepared to prevent or detect them.
Once your controls are operating effectively and efficiently in the most impactful areas of the company, your company will be stronger. Deal with potential problems before they become actual problems. Avoiding disruptions will allow your company to operate more smoothly and allow customers, vendors and stakeholders to have greater confidence in your company.
Contact Steve Guarini at firstname.lastname@example.org or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.
Receive insights from our specialists in a variety of areas and timely information on upcoming events directly to your inbox as they go live in our online Knowledge Center.