The internal control system is a synchronized set of actions that management takes to prevent and identify negative events in the organization. In general, it is aimed at identifying company risks, developing verification measures, as well as monitoring their effectiveness.
The whole system includes accounting, controls and a characteristic of the controlled environment.
As for the structure and tasks of the internal monitoring system, of course, it is impossible to single out a single model of their creation and formation. However, it will not be difficult to name some common features of its construction, which can be seen in many companies.
So, the internal control system is organized with the participation of several services. For some of them, this field of activity is the main one, for the rest it is secondary. The first category includes the economic security service and the control and audit structure. The second group includes personnel services, as well as financial, economic and legal structures. As for the unit responsible for corporate governance, it occupies one of the main positions, since it exercises control over the regulation of the main management procedures.
Internal control at the enterprise has a rather complicated structure. Thus, the economic security service carries out constant monitoring of important management subsystems, determines cases of serious violations of the established norm, and also carries out preventive work to prevent such. As for the control and audit department, its purpose is to periodically conduct inspections of the financial and economic work of units, and, most importantly, to monitor compliance with the management regulations. The financial and economic service collects information and is responsible for planning, that is, for the factor that is the hallmark of effective management. The personnel service deals with personnel issues and conducts an audit of future employees. The legal department is responsible for resolving all legal issues.
The internal control system has several objectives for its implementation. So, she does the following:
1. Carries out the ordered and effective activity of the company.
2. Ensures that every employee of the enterprise adheres to management policies.
3. Ensures the safety of company property.
Among the objects of the internal control system are the cycles of activity of any organization: supply, production and sale. And one of the important functions is to ensure that all employees comply with their direct duties.
The internal control system for its implementation uses several basic methods:
1. Accounting, financial and management accounting.
2. Control, audit and audit.
3. The use of control theory.
Assessment of the internal control system determines the degree of trust of the auditor in the presented statements and affects his opinion in the preparation of the audit report.
The level of reliability can be assessed either in terms of quality (high, medium, low), or in terms of the degree of probability of omissions and the prevention of errors.
Based on the fact that there are currently many business operations, it is difficult to maintain modern accounting; many large enterprises are striving to create their own internal audit system. The thing is that this measure helps ensure the reliability and correctness of the financial statements, as well as maintain the image of a reliable partner and minimize the cost of external audit.