What Are the Key Components of Financial Controls?
Effective financial controls encompass several key components:
1. Budgeting and Forecasting: Creating a detailed budget helps in planning and allocating resources efficiently. Regular forecasting helps in anticipating future financial needs and adjusting plans accordingly. 2. Internal Audits: Regular internal audits help in identifying discrepancies and areas of improvement. They ensure compliance with financial policies and procedures. 3. Segregation of Duties: Dividing responsibilities among different individuals reduces the risk of errors and fraud. For instance, the person who handles cash should not be the one to record transactions. 4. Access Controls: Limiting access to financial systems and data ensures that only authorized personnel can perform specific tasks. 5. Financial Reporting: Accurate and timely financial reporting provides a clear picture of the companyâs financial health, enabling informed decision-making.