Internal controls are the set of practices and procedures established for reliable financial reporting, operational efficiency and legal and regulatory compliance. A poor controls framework can therefore lead to high profile operational incidents, damage hard-won reputations and even result in business failure.
Controls should be appropriate for the size of the business as it is at present and also provide a robust framework for the future. As a company’s financial, operational and compliance context evolves, control environments must keep pace.
De-risking your company
A strong control environment will:
- Address and mitigate business risk
- Avoid expensive operational incidents
- Avoid financial reporting errors
- Fortify a company’s resilience to adverse events
- Prevent fraud
- Embed internal ownership and accountability.
Adding value to your company
A commercially astute control environment will:
- Improve efficiency and effectiveness
- Provide assurance to stakeholders including investors, finance providers and customers
- Streamline and simplify processes
- Standardise reliable output
- Reinforce strategic direction and culture
- Empower individuals to work autonomously.
A roadmap to strong governance
- Document: Businesses should define control objectives in the context of their specific financial, operational and compliance context.
- Assess: With a complete list of control objectives, the control structure in place can be assessed for effectiveness of design and operation.
- Optimise: With all control gaps and control weaknesses identified, a comprehensive set of commercially sensitive supplemental controls can be devised to ensure all control objectives are adequately met.
- Monitor: As businesses change and mature, so too must the controls framework that governs them. To this end, therefore, controls and their objectives require consistent updates and ongoing review.
How we can help you and your business:
We are happy to have an exploratory conversation with you to understand your business requirements and where you may need assistance, which could include:
- Documenting controls in a clear and accessible way
- Testing the design and implementation of controls for efficiency and effectiveness
- Performing an independent review of your control structure using a ‘controls map’ to identify gaps and weaknesses in the design and implementation of controls. This may range from a comprehensive analysis of an entire control structure to a targeted focus on one area of weakness
- Performing a review of your control structure to identify areas that can be simplified and streamlined to improve efficiency and effectiveness
- Working with management to advise on the design of controls to ensure they meet their objectives.
- Internal audit services
- Assurance and opinion services
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.