tl;dr
A system of policies, procedures, and checks designed to protect assets, ensure accurate financial reporting, and promote operational efficiency.
Internal controls help prevent errors and fraud while supporting reliable business operations.
Picture a company's accounts payable system requiring three levels of approval for payments over $10,000, automated matching of purchase orders to invoices, and regular account reconciliations. These controls help prevent unauthorized payments, ensure proper documentation, and maintain accurate records.
Implementing effective internal controls requires balancing control objectives with operational efficiency. Organizations must identify risks, design appropriate controls, and monitor their effectiveness.
See how this works in Light's Workflows.
