Risks That Internal Controls Help to Avoid

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Risks That Internal Controls Help to Avoid
Anneke Zwart, Student (University), Netherlands, Member

Internal controls are important in every organization, as they support organizations in achieving the objectives that have been set. Internal controls are also an important component of Enterprise Risk Management. Without proper internal controls, the chance of several business risks increases: 1. Business Interruption: internal controls help to avoid system breakdowns and errors, and therefore it helps to prevent excessive re-work to fix errors. 2. Erroneous Management Decisions: erroneous, inadequate or misleading information may lead to erroneous management decision making. Internal controls help to prevent the presence and usage of unjust information and that helps organizations to make effective decisions. 3. Fraud, Embezzlement and Theft: Internal controls are unfortunately needed to stop or minimize embezzlements and frauds by managers, employees, consumers, suppliers and so forth. 4. Statutory Sanctions: In organizations with good internal controls, people are aware of the (...) Read more? Sign up for free
 

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