How to Improve Internal Control for Your Growing Business

Often, company management may not always know how to implement internal controls, much less how to improve it, when they are scaling their business. Companies commonly take this step for granted until their efficiency decreases or when they encounter a financial disaster. 

What is Internal Control For? 

Too many small businesses in Australia are susceptible to fraud when they don’t have internal controls in place. Having internal controls in business reduces this risk as you establish systems by which you could identify risks, promote best practices within your teams, minimize opportunities for fraud and error, and take corrective action in case something goes amiss. 

Regardless of your company size now, it’s important for your business to get started in building a culture of success. That means setting up mechanisms to protect you and your company from fraud, theft, and other financial problems that can scale with you as you grow. 

Internal Control in Business: How to Get Started 

To establish effective internal control measures, it is essential to first examine your company's culture. The top leadership team should have a positive attitude towards internal control, with a focus on protecting assets, ensuring accurate financial reporting, guaranteeing regulatory compliance, and streamlining processes to achieve business goals efficiently. 

Once you have assessed your business culture, it is important to review and improve your internal control procedures. Here is a top-level internal control checklist to help you evaluate your control procedures: 

1. Protect the company’s assets 

    - Install security measures to safeguard both physical and non-physical assets. 

    - Implement access controls and restrict unauthorized access to sensitive information. 

2. Ensure the accuracy of financial reporting 

    - Clearly define roles and responsibilities for creating and modifying financial records. 

    - Conduct regular accounts reconciliation to identify discrepancies and ensure accuracy. 

    - Establish procedures for processing disbursements and handling financial data. 

3. Regulatory Compliance

    - Stay updated with relevant regulations and ensure compliance in all financial processes. 

    - Adhere to Generally Accepted Accounting Principles (GAAP) for proper financial reporting. 

    - Establish a system for monitoring and documenting compliance with regulatory requirements. 

4. Streamlining Processes

    - Develop and document operational and financial processes to standardize output. 

    - Identify and address any weak points in processes that may lead to fraud or non-conformities. 

    - Continuously review and improve processes to enhance efficiency and effectiveness. 

5. Encouraging Whistleblowing

    - Create an open-door policy where employees are encouraged to report any irregularities or fraud. 

    - Establish anonymous reporting channels to protect whistle-blowers and ensure confidentiality. 

Remember, every business is unique, and internal controls should be tailored to fit your specific needs. This checklist serves as a guide to help you improve internal control in your company. By implementing these measures, you can focus on delighting your clients and driving your business forward. 

We’ll Help You as You Scale Your Business 

Need support as you transition into bigger ventures? D&V Philippines can keep your finance and accounting department in order as you scale your business. We have over ten years of experience in helping businesses like yours. Schedule a free consultation with us today 

You can also download our whitepaper Premium CFO Solutions to learn how we can help you! 

 This post was first published on 13 February 2019 and edited on 4 December 2023 by Angelica Garcia