Internal Control Programs Are Important

Internal control programs are important aspects in the execution of proper management of an organization. With internal control programs, every process and activities within an organization can be organized and monitored whether they fulfill and accomplish the objectives of the organization. The importance of an internal control program lies on the guidelines and principles it contains, as well as on the ability of employees to follow the things that internal control programs direct. From the established reasonable policies indicated in internal control programs, an organization can be assured that every entity within will act based on the proper organization policies in an aim to maintain peaceful and smooth business operation.

An online article, entitled The Importance of Internal Control, listed the following several principles. From these principles, the importance of internal control programs can be defined.

Management Attitude

System Monitoring

Establish Reponsibilities

Prepare Written Procedures

Maintain Adequate Records

Segregation of Duties

Effective Internal Control Techniques

There are several internal control techniques that define the minimum level of standards in managing an organization. By means of internal control techniques, the objective and need to have a continuous standard level of operation that meets the objective of an organization is assured. Following are some of the ideal internal control techniques that most organizations implement in their work environment.

Documentation

Providing a documentation of procedures and policies allow references of policies to be available to employees. Documentation is a means of clearly listing management directives.

Supervision quality-supervision is an effective internal control technique to ensure that internal control standards are maintained within an organization. A continuous monitoring of operations in an organization is a part of supervision technique.

Audit

Audit is another effective internal control technique. Through audit process, any problems or weaknesses within an organization can be identified and be provided with resolutions.

Illustrate the Relationship between Ethics and Internal Control Techniques

One issue that usually arises when exercising internal control techniques is its relationship with ethics. The impact of ethics on internal control, and vice versa, is important to examine especially for the managers who usually handle the implementation of internal control programs.

Defining internal control techniques usually need ethics as base reference. This is because the condition of employees must always be considered, whether an internal control will positively or negatively affect the people within an organization. Thus, when establishing an internal control program, the "good for all" must always be the objective. While internal control techniques define what is good for an organization, the employees who comprise an organization must therefore benefit that "good." And, what is good must always be in accordance to the values of ethics.

Define the Importance of the Sarbanes-Oxley Act

The importance of the Sarbanes-Oxley Act is apparent in the treasury management of corporations. According to Steven Krippner, on the purpose that Sarbanes-Oxley Act serves, it protects investors by improving the accuracy and reliability of corporate disclosure..."

The Sarbane-Oxley Act is important because it regulates and protects investors, especially those who file financial reports in accordance to the Security Exchange Act (Trema.Com). Fraud and white-collar crimes are similarly monitored and prevented by this Act. This is made possible by requiring managements to submit certified and accurate documents and disclosure of information.