The Internal Control Mechanisms – The Key Factor to Business Success

Authors : Dr. S Gopalakrishnan CFE

Volume/Issue : Volume 7 - 2022, Issue 3 - March

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The success of any business solely depends on the controls and processes adopted and implemented by the business units. In the ancient times, the businesses were conducted on judgemental basis, which purely individual driven. The concept of collective efforts were not felt and accordingly the merits and de-merits both were witnessed related to those business ventures. As a pinch of autocracy was dominating in those businesses, the employees were considering the employment only as a job for their earnings. But the modern management thoughts takes the business to a different direction whereby democratic participation of all the stakeholders are the need of the hour and hence the management had to take a paradigm shift in the way the businesses were directed. The qualitative elements of the business are of high priority in the current world, which triggers the need to have greater economy, high employment growth and delighted customers, for which strong risk management processes must be embraced. In order to ensure, consistency in terms of risk reduction, appropriate tools ought to be designed and implemented by the Top Management of the business houses and ultimately the Internal controls serve as these tools. The robust controls implemented at all levels of the business will be directing towards a qualitative operations, presiding financials, and sturdy compliances. The controls will be strengthening the base of the operations which will further usher the cash flows which are the foundation for business sustainability. The control mechanisms will be leading to achieve high persistency in terms of revenue and profitability growth for the entity, as the productivity will be at the higher end and the risks at the lower end. Any breakdown of controls, may lead to an organizational collapse, as it will be activating the fraudulent practices from the top to bottom. Hence strong Internal controls and its consistent implementation only can be helpful to bring the risk factors to the acceptable level.

Keywords : Internal Controls, Governance, Risk Factors, Control Breakdown, Internal Controls Over Financial Reporting, Fraud Deterrence, Management Override


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