Sayyed Muhammad Ahmed Dabir
BU7025 - Employment Dynamics
University Of Chester
Internal control mechanisms have a more important role to play within the modern workplace than external control mechanisms. In fact, internal controls play a very important role in any organization’s business and financial policies and processes. Internal controls comprises all the steps considered by the management of organization in order to (Pfister, 2009); (i) preserving its valuable resources against ravage, deception, and inadequacy; (ii) making sure dependability and accuracy in accounting; (iii) securing conformity with the organizational policies; and (iv) appraising the performance level in every unit of the organization. It is a general fact that the implementation of internal control mechanisms is good for the organisations.
According to Blyton & Turnbull (1992), the activities of internal control can be divided into five major components: control environment, risk assessment, control activities, information and communication, and supervision and assessment. In the past, internal control mechanisms were usually employed to test, asses, and confirm accounting and financial statements, and to assure financial reporting accuracy. After arrival of the Internet and other latest technologies, flexible processes of manufacturing, and concepts, like quality control and total quality management (TQM); the environment of business has become a more competitive, complex pitch that has needed to redesign the whole process of business and develop new models of business (Edwards, 1997). From these re-establishing, systems of internal control are also employed to test, assess, and confirm all facets of operations and administration of a firm to make sure that organisational goals and decisions are being accomplished and set managerial, functioning, and financial policies and processes are being complied (Pfister, 2009). The internal control mechanisms a business develops must be comprehensive and must extend to the systems of administration and operation as well. It is important that the objectives of internal control mechanisms are to accomplish:
• Organizational and managerial goals;
• Operational effectiveness;
• Compliance with relevant rules and regulations;
• Protect assets against misuse, deception, and official use of resources; and
• Correct and proper reporting and recording of information and revenue.
According to Pfister (2009), the internal control mechanisms of an organisation must comprise finance, administration, and operations. As a major part of internal control mechanism, quality control is commonly employed by engineering and manufacturing companies to assure their products and services fulfil the needs and expectations of customer. Though, quality control must not be a method employed only by these organisations, but also a method employed by any organisation that markets and sells products or services. It could be as easy as buying better-quality products from wholesalers for retail, having good “customer service associates” run a call centre, receiving and delivering of just-in-time inventory for well-timed consignments of purchases by a distributor, or solving the complaints of customer within the organisation. Obviously, execution of comprehensive internal control mechanisms goes beyond excellence in service, development, production, delivery, or accuracy in reporting/recording information and revenue to comprise all mechanisms that cause to organisational efficiencies, effectiveness, conformity with organisational rules, and economy of scales.
The administrative, operational, accounting, preventative, and detective are the different concepts and natures of internal control mechanisms. All are intended to accomplish particular objectives of organization and conformity with decisions of the management. As instance,...