What are Internal Controls?
Internal Controls comprise a series of internal policies, procedures and processes designed to ensure an organisation functions efficiently while mitigating its
exposure to risk and adhering to legal and regulatory compliance. These controls are fundamental building blocks that protect an organisation from the risks of fraud. The specific types of fraud risks and the controls in place to mitigate these risks will vary depending on the size of the organisation and the nature of its activities – but many internal controls are common to all.
Internal Controls and Fraud
Internal Controls not only make it more difficult to commit fraud, but also make it easier to detect fraud once it has occurred, additionally providing a mechanism to correct any weaknesses in the system that allowed that fraud to occur. By detecting a fraud earlier, the financial and reputational impact on the organisation will likely be reduced. Internal Controls are generally grouped into three categories. These are:
- Preventative Controls
- Detective Controls
- Corrective Controls
