Skip to main content

The control system you put in place

Hello readers, today I will be looking at control systems you put in place in your business to safeguard your assets. A control system is the actions you put in place to record and protect the assets of a business organisation. A control environment can be seen as one of the five components of the internal control system. In other words, it is not responsible for the overall effectiveness of the internal control system but it contributes positively to it. A strong control environment includes the attitudes of the directors and management. They must be full of integrity; they must communicate and enforce integrity when it comes to dealing with employees. This will increase the confidence of the individuals charged with governance (directors) and management that their financial statement will be free from false information. In other words, it will reduce the risk of theft within business organisations.

A strong control environment also encourages competency. Your staff must not be given responsibilities that are beyond their level of competence, this will help minimize errors during the execution of business activities, as such enabling the business to achieve its goals easily. When staff are given tasks beyond their level of competency, there is a high possibility that they will not achieve the goal of the task. The way duties are assigned to all level of management and staff must be planned properly, the plans must be executed and enforced. Directors must also be a part of the business, in other words they must contribute to the managerial activities of a business organisation.

Another component that encourages an effective control system is the segregation of duties. When the accounting processes are segregated into smaller business tasks it also minimizes the risk of fraud and errors within an organisation as it will be difficult to carry out fraudulent activities or make errors that way. Maintaining records by using the appropriate information system is another component that ensures an effective and efficient control systems. Transactions should be recorded appropriately. The information system must record and report the business transactions correctly, following all the accounting policies and procedures. 

A business must also carry out risk assessment processes. Risks must be assessed, the likelihood and the probability of the risks must also be analysed. When likelihood and probability of the risk occurring are high the risk should be avoided, however when one of them is high and the other is low the risk should be mitigated for example you can get insurance. When the likelihood and probability of the risk are both low, they can be overlooked. The last component of a control system is the monitoring of controls. You must monitor your controls to ensure that they are carrying out the goals they have been instilled to achieve. This will help you know when it has a loophole, thus, actions can be carried to eliminate such loopholes. In other words, businesses must review their control systems to ensure they are effective and efficient.

Keep checking out my blog regularly, Cheers!


Popular posts from this blog

Eid Mubarak

Happy Eid ul Fitri

Understanding the buyers behaviour

Hello readers, today I will be writing about buyers behaviour when it comes to purchasing products (goods and services). I hope your week has been good. A buyer is an individual that makes a purchase. That purchase can be influenced by his/her emotions or his/her rational mind.

For your marketing strategy to be successful you have to truly understand the buying behaviour of your customers. Some customers buy goods based on trust and loyalty which falls into the emotional reasons. Thus, you have to build trust between your customers and yourself so they can return back to you. Trust is built when you offer good quality for reasonable prices.

Some products are bought regularly while some products are purchased seasonally. If your products fall into the seasonal category, you should only purchase them to be resold during that season. At times buyers purchase products on behalf of another individual. In that situation, you have to capture the mind of both the buyer and the actual person tha…