Are your assets at risk?

Looking at the newspapers recently, there are a number of articles alleging fraudulent acts of some considerable scale. If what is reported in the press is anything to judge by, then it demonstrates that businesses generally need to have a long hard look at their governance and internal controls.

Whilst internal controls don’t eliminate the risk of theft, fraud and defalcation, they can certainly assist in reducing the risk and put a limit to the losses!

What exactly are internal controls? They are the checks and balances that you put in place to protect your assets, which includes cash, plant and equipment, intellectual property, commercially sensitive information and reputation. Controls may be either preventative or detective in nature. Preventative controls consist of things like segregation of duties; counter-signing of documents e.g. cheques, purchase orders; security doors/locks and CCTV. Detective controls consist of things like audits, stocktake and reconciliations e.g. bank reconciliation.

Internal controls ought to be reviewed annually for adequacy and sufficiency in conjunction with a risk assessment. The governance side of the picture requires delegation of responsibility, authority and accountability, clear reporting lines and ‘whistleblower’ provisions, supported by appropriate policies, procedures and systems. What do you stand to lose through poor governance and internal controls? How effective are your governance and internal controls?

If you’d like assistance establishing an effective governance framework and internal control system, or would like an appraisal of your existing governance framework and internal control systems, then please don’t hesitate to contact us.