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Internal Controls are Like a Family

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All employees are like a family :

Every individual holds various responsibilities to maintain the dignity and respect of their household. It tends to be externally and internally.

Externally, there are laws and rules in every country such as traffic rules, economic rules, tax rules, etc established by the government for everyone to abide by. Internally, there are rules and duties in every household where every parent or guardian needs to work and earn for needs and necessities, supervise their children, etc. Every child needs to study and retain the knowledge of the world. There are domestic chores and errands to run the household. Similarly, every organization has diverse culture, objectives, administration, and so forth.

There are a few important internal and external controls that need to be taken into consideration. The external controls can impact the governance, economy, market competition, public releases, etc. Let’s dig a little deeper about a few important internal controls.

The HEAD of the family :

In every household, there will be at least one head with decision-making duties for the household needs. They handle the culture, life routine, personal finances, etc.

In an organization, there are structures, policies, work environment, budgeting, etc. The management implements these administrative controls to govern the behavior of the organization. This type of control is one of the important internal control and represents the highest class of controls that apply to everyone within the organization. It is the GENERAL CONTROLS.

TECH-SAVVY Children : 

Technology has changed the world since the 2000s. The children are provided with a smartphone or any gadgets with parental controls settings. It is for their protection and safety.

Most companies are welcoming new technologies and innovations. Of course, there will be challenges towards the technology changes. This control addresses the protection necessary for the use of technology in the organization. This control is the subset of general controls with additional definitions on managing and monitoring the specific technology. They are PERVASIVE CONTROLS.

Pamper or Strict parent : 

Everyone in the household will be assigned separate duties to maintain their integrity, values, and wellness. The housekeeper has different duties and rules to maintain the cleanliness of the household. The security guard has specific tasks to protect the household or society. This task cycle theory needs to keep running.

There will be procedures that require additional detailed controls to ensure that employees perform the job correctly. These controls indicate how and when to execute a procedure. The controls which refer to specific steps or tasks to be performed are DETAILED CONTROLS.

Careless or Protective Parent : 

You can imagine the situation if you leave a child defenseless in any dense forest or dangerous place to fend for himself. It makes as much sense as leaving any application exposed without the higher-level controls. Like every child, the application should be shielded and protected from any harm.

The main objective is to assist the organization to ensure the protection and security of data utilized by and transmitted between applications. Application controls help to ensure proper coverage and the confidentiality, integrity, and availability of the application and its associated data. The lowest subset in the control family is the APPLICATION CONTROLS. They are normally incorporated into the software or govern its use.

Pure coffee for the family : 

All activities need to filter through the GENERAL controls, and then the PERVASIVE controls and DETAILED controls before it comes to the APPLICATION-control level.

These four important internal controls develop a hierarchy of internal controls. We can call it an INTERNAL CONTROL FAMILY.

Internal Controls Pic

 

Favourite child of the family : 

Like any Olympic Gold Medalist represented for their country, every employee can represent their respective company by following every internal control cautiously and sincerely. All employees together can be responsible to get the company qualified for ISO Certification which is like a Gold Medal for the organization. Every household member can feel like a GOLD MEDALIST or FAVOURITE CHILD by maintaining the integrity, values, and wellness of their respective household.

Thoughts on “Internal Controls are Like a Family”

  1. Vishnu Aditya Ashok

    Great article with several insightful observations, Arun!
    It’s intriguing to notice the patterns that without our realization, have always existed.

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Arun Ramakrishnan, Lead Quality Assurance Consultant

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