CONTROLS IN BUSINESS ENVIRONMENT
In business and audit practice, there are different types of controls which organizations can leverage to ensure adherence and also for growth purpose. All controls are very important, however which two (2) of these controls would you consider smarter or best priority for an organization that want to grow faster?
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Detective Control
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Preventive Control
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Corrective Control
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Compensating Controls
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Compliance Control
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Access Control
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Physical Control
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Systems Control etc.
Controls are internal policies, rules and guidelines a business delegated management team consciously institute to ensure operational activities are performed and tailored towards specific desired framework and aimed result.
Controls are salient essentials an organization should never overlook. Depending on what management is desiring or aiming at, controls are built to address specific aimed target. For example, preventive controls may be built to never allow the occurrence of certain transactions, access, or malpractices. Access control may be built to disallow unauthorized persons from gaining access to an office or to post transactions on an application software or system.
Detective and corrective controls are post-occurrence in nature as they are instituted after or as a result of an unfavourable occurrence. That is, after an organization has suffered financial or operational loss. Compensating controls are controls built in such a way that two different levels of controls are meant to checkmate the same occurrence or transaction. This is to ensure effectiveness of control, noting that if one does not work, the other will.
Compliance controls ensure adherence to both internal policies and also external regulations of government agencies. For example, recruiting new customers following management laid down procedures, increasing sales targets as well as paying salaries and incentives in line with laid down policy, filing taxes, remitting pension and other regulatory obligations on or before regulated dates, instituting Internal Control Over Financial Reporting (ICFR) etc.
The more an organization grows in terms of staff strength, customer base, vendor list, increase in volume of transactions and become exposed to government regulatory bodies, the more the need to build controls and also frequently review the effectiveness of such controls.
Therefore, smart organizations are those organizations that do not wait for unfavourable transactions, regulatory fines and penalties, fraud and malpractices to occur before taking the right step of building and instituting adequate controls.
In conclusion, the cost of building and maintaining control is nothing compared with the benefits that effective controls offer to an organization.
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