The quality of an organization's internal controls affects not only the reliability of financial data, but also the ability of the organization to make good decisions and to remain in business. The Need for Control Control is Part of Corporate Governance - Delegation of responsibility to management occurs within a framework of control and accountability. The control system exists to ensure that responsibilities are properly identified, and that tasks are assigned in accordance with responsibilities and accountability. Fraud is not the only concern.
Many new businesses fail because of inadequate controls.
External Reports by Management - management is increasingly being called upon to report on their oversight of internal controls. Audit Committee Reports - Users are demanding to know more about what the audit commitee has done and its analysis of the organization's control and reporting structure. A Framework for Understanding and Evaluating Internal Controls Management sets a tone that influences the level of control consciousness in the organization and of employees in carrying out their duties. Within the framework of a company's broad control guidelines, specific control procedures are developed. Management monitors the effectiveness of control procedures through exception reports and internal audit examinations.