Internal Control

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"No matter how sophisticated a system of internal control is, its success ultimately requires that you place your trust in certain key personnel"


Within any organisation a high level of trust has traditionally been placed in management and key personnel. This has led to some quite public failures in corporate governance and internal controls – Enron, WorldCom, HIH insurance etc… A lack of effective personnel controls can lead to a multitude of organisation problems such as fraud, theft, excessive costs and poor management decisions. The solution therefore is not to trust the key personnel but instead to trust the controls. This in turn means that organisations need to develop more sophisticated more ‘water-tight' control policies and plans. Truly effective internal controls establish a framework whereby only honest, trustworthy, competent, qualified employees are hired and business objectives are continuously met or surpassed. Sophisticated controls have the ability to eliminate the need to place high levels of trust in key personnel but it can never be a case of develop the control and trust it implicitly with no evaluation or adjustment. These new controls plans need more than just development, they need to be treated as living objects continually reviewed, monitored, assessed and redeveloped in order to move with both society and technology creating a business environment where the trust is on the controls, not the people. 1.0Personnel Controls

In reducing or eliminating the need to heavily trust key personnel and instead trust the internal controls, the particular control that needs to be addressed is personnel control, more commonly referred to as ‘Human Resource Management'. It is this control in itself which needs to be the most sophisticated of all particularly within the accounting or information systems environment. Why in particular in these environments? Mainly because of the level of access associated with these...
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