Kindly help with the financial implications of presence and non presence of internal control in organisations.
I mean what will be the implications of organisations having or not having internal control
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The importance of Internal Control cannot be over-emphasized. But it is a very necessary evil that is needed to stabilize the financial activities of the firm.
When there is no Internal Control in an organization, the financial implications will be:
- No trust in the Financial Report of the firm by her shareholders (existing or potential)
- The employees can/will help fold up quickly the firm without notice (because they are given free hand).
- Transactions cannot be tracked
- Fraud will be rampart
- Unauthorized transactions will take place
- Assets of the firm might be stolen one by one by employees without notice
- Management goals and budgets will not be met, etc.
When a very good Internal Control is in place, a lot of things which is the backbone of the firm will fall into place because management will have proper contol over everything that goes on in the firm. These includes:
- Trust on Financial Report from Shareholders (existing and potential)
- Fraud Tracking is easy and will be reduced to the bearest minimum
- All transactions are tracked and authorized
- All assets are well protected
- Goals and budgets will be met
There is more and more benefit if the is a proper Internal control in place in a firm.
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