All procedures, rules, regulations, policies, guidelines, developed and implemented by the company’s management should be understood under the internal control system (ICS) in order to ensure the effective operation of a business.
The main visible results of an effective ICS for a company are:
• achieving economic goals and asset protection
• timely prevention and detection of fraud, spoofing, random errors
• timely preparation of financial and management information, accuracy, objectivity and completeness of accounting records
• lack of executive discipline violations
ICS efficiency depends on a number of internal factors:
• organizational structure of a company
• presence/absence of an internal audit department
• the scale of the separation of functions between the responsible officials
• probability of pressure when making decisions
• general competence of the staff, including those who are occupied with internal control
• extent of the use of automated information systems
The testing of the ICS by an independent auditor is an objective, impartial assessment of the company control environment, identifying the strengths and weaknesses, development of guidelines for existing risk elimination and improving the ICS.
The testing of theICS provides management an opportunity to evaluate the effectiveness of the control environment. The result of such an evaluation for company management is the understanding of:
• a common position, awareness and actions of senior managers (and other employees in key positions)
• compliance of key personnel behaviour during management decision-making in the control environment of a company
• the degree of execution of control procedures established by the management for resolving certain tasks of a company
• total level of ICS, the need to focus on specific risk zones
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