Internal Controls Provide Added Protection

Managers and employees alike often ask why do we always have to:

1. Lock the supply room door?
2. Display our identification card?
3. Sign documents prepared by our subordinates?
4. Ensure that all vendors are registered?
5. Maintain copies of documents supporting transactions?

Some of these requirements are in fact a matter of law or regulation. But even in those cases compliance is not the real reason. This is generally because the provision of the law or regulation was writtin the support the real reason.

In each case such rules, which are examples of frequently applied interanl controls, are imposed to make it less likely that some serious adverse consequence (known as a risk) would 0ccur. The underlying risks behind doing the five internal controls listed above are:

1. An unauthorized person could take some or a lots of supplied for personal use.
2. A non-employee could be gain access to the office, remove personnal or organizational property or information, and not be suspected of having an inappropriate reason for being there.
3. You assistant may make a serious error in preparing a document that could have costly consequences.
4. An unregistered vendor may turn out not be be a legitamit business.
5. It may be necessary to substantiate the validity or accuracy of a transaction at a later date.

An internal control is rarely an absolute quarantee that a problem will be avoided; neither is not doing the internal control a guarantee that there will be a problem. For example, it is possible that a supply room door could be unlocked all day and no items get taken for inappropriate purposes. However, leaving the door unlocked provides too high a likelhood of a theft to be allowed. Similarly, if the door is always kept locked there could still be a theft by an individual determined to commit a criminal act. However, the odds of this happening in an otherwise well managed work environment is appropriately low.
If you are wondering why a certain rule is in place in your workplace, contact Stu on Patrol at this website and he may provide you a likely underlying reason in the form the risk that the rule in designed to mitigate. On the other hand if you are worried that a certain bad thing may happen need an idea of what rule or device may make that problem less likely to happen, contact Stu on Patrol and he may be able to provide you some suggested actions.