As organizations grow, so does the need for monitoring activities. Implementing internal control tools can help organizations monitor and measure all activities to assess their performance. The internal control baseline is a beneficial tool to ensure that objectives are achieved, but it can be difficult to implement correctly in large and complex organizations.
Internal controls are the processes, checks and balances that needs to be put in place in a large organization. They are the methods and procedures established to provide reasonable assurance for an organization that the right actions to achieve its objectives are in place. Internal controls are used in many areas of an organization, including operations, reporting, and compliance.
When it comes to finance, internal controls are critical for safeguarding assets. Areas within finance may include regular management and supervision activities, comparisons, reconciliations, and other routine tasks. Furthermore, a system of internal controls is crucial in large organizations because there will not be a single person with a complete oversight and knowledge of all operations.
Internal control baseline
An internal control baseline is a way for a company to measure improvements in the internal controls and it thereby plays a crucial part of an organization’s ongoing development. Organizations should therefore establish a baseline for monitoring and measuring internal controls to ensure a growth or improvement that is as beneficial as possible. Top management should be involved to highlight the importance of the baseline and serve as reference for all internal control activities.
Implementing an internal control baseline is dependent on employees deciding the internal controls and that they have a solid understanding of internal controls and what it entails. Crucial to this process are also resources, capabilities, and authority to conduct assessment of internal controls.
Difficulties of implementing baseline internal control tools across large organizations
Though implementing an internal control baseline is a helpful approach to monitor and measure internal controls, it can be a difficult task to fulfill. Many large organizations struggle with implementing an internal control baseline due to their complexity. This is often due to the fact that the needed basic controls are set up by employees in central functions of the organization, though these employees do not have the same understanding as employees’ actually working with internal controls on a daily basis. The understanding of what is needed from the internal control can thus differ from the central function of the organization to the more local functions where the internal controls are processed or performed.
Due to this lopsided structure, many organizations consequently experience that the overall quality of reconciliations, processes and controls relies on the employees in the central function that set up the controls. An example of this is in the finance department, where accountants are having a difficult time relying on documented internal controls due to the fluctuating quality of the controls.
A solution to ensure a high quality throughout the organization
Ensuring a high quality of internal controls can be achieved when using the right tools. Impero offers an intuitive cloud-based compliance solution for organizations wanting compliance throughout their organization. Impero’s solution has a unique and light-weight approach that helps small and large organizations defining their internal control baseline and get these cascaded to different divisions or subsidiaries.
Adding additional controls as demands arise, or adding new subsidiaries as an organization expands, is no problem with Impero. The solution can help organizations define their internal control baseline as well as the monitoring of it. Documentation is uploaded in Impero and access to all relevant documentation can easily be granted to the right stakeholders. The organization, internal and external auditors, and other employees can therefore base their work on the internal control and thereby strengthen the overall quality while also reducing time spent.
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