As the controller of this firm, it is my duty to re-evaluate the control systems of this company, both internal and external. As the current control system is working appropriately, there is a need for more, which further justifies the need for an internal control system. As previously indicated by the firm, there has also been the usage of external control systems and they appear to be more useful and cost effective, but the truth is that a properly operated internal control system is more beneficial to a company than an external one. The cost could vary and sometimes be more expensive, but the gain in the usage is worth the funds appropriated for the internal control system.
Insurance and Portfolio Approach Many organizations tend
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Many policies and procedures can be put into place to segregate duties of employees and allow for cross training that will further allow other employees to understand the necessary steps to complete tasks and how to read and review financial reports. The usage of an internal control system can allow for disclosures that could provide further information regarding financial reports. The usage of the internal control systems relies on creating effectiveness, efficiencies, reliable financial data and compliance with local, state, and federal regulations. “Disclosure requirements can sometimes provide a more efficient regulatory tool than substantive regulation through more or less detailed rules. Such disclosure creates a lighter regulatory environment and allows for greater flexibility and adaptability” (Spira, 2010). To further assist with providing justification for the usage of an internal control system, it provides further reliability on the financial reports that are created because organizations are now required to maintain compliance based on the Sarbanes Oxley Act (SOX) of 2002.
In conclusion, the usage of the internal control system does not indicate that the insurance and portfolio approach are not