The Increased Demand for Financial Controls
Financial cost controls enable you to trust your numbers and drive more efficiency. While the demands for financial controls continue to increase at a steady rate, more regulations are being added. This means that there is a greater need for creating a more thorough process.
Ultimately your goal is to increase control and trust your numbers. With that in mind, we have compiled 5 helpful steps that will help you implement control activities, streamline your processes and improve risk identification.
5 Vital Components of Internal Control Over Financial Reporting:
Setting the Financial Controls Foundation
Your foundation is what sets the tone for all of your internal control activities. That being said, having a solid plan in place for producing knowledge and clarity regarding the potential risks in a financial close is imperative. These risks can include fraud, manual errors, and shared spreadsheets.
Assess the Risks
Identify and analyze every possible risk. It is also essential to cross-reference those findings with your key objectives to make sure that there is nothing in the way, blocking your success.
Communication
Communication is critical. Keep your finance staff updated and familiarized with the continuing control activities.
Monitor
Use an IT system that is purpose-built for monitoring the financial close process. It can help you to test and modify the control activities.
Define the Processes and Activities
By clearly defining your processes and activities, you can reduce your risks. Transaction matching and audit trails are both examples of a control activity.
Many business owners think that it will take months of analysis before they start to improve their financial close process. Fortunately, this is not the case, when done correctly, you can get a lot evaluated in a short amount of time. When you apply the right steps, you can meet the needs for financial control without unnecessary stress.
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