6. Critically discusswhat constitutes having a ‘good’ internal control in a contemporary andcomplex business world. Your answer should cover how organisations coulddevelop an internal control strategy so that they are not exposed to excessiverisks or behaviours that could harm their reputation for honesty and integrityof their staff. Internalcontrol is referred as an important element of accomplishing a businessobjective and developing competitive advantage in existing market. So, it isnecessary to formulate internal control strategy to avoid business risks anduncertainties.
There are a lot of constitutes that enforce effective internalcontrol in a complex and contemporary business world. Some of them arefollowing: Information andCommunication: It is the foremost constitute ofdeveloping internal control over business activities. It means that anorganization needs to focus more on enforcement of open, effective, andtransparent communication system within their internal environment (Du, 2016). This will facilitateeffective understanding of business issues and mutual cooperation amongexisting employees.
Monitoring: Itis the second important element of enforcing good internal control withininternal environment of an organization. The monitoring constitutes concentratemore on conducting self-auditing within internal operations of organizations.It is believed that the monitoring constitute will inform the management aboutwhether the internal control level if effective or not. If it is not effective,the business management can take other initiatives for further improvements.Control Environment: Thelast and important constitute is control environment.
This constitutes informthe employees about the importance of organizational culture awareness. Thecontrol environment indicates that the employees within an organization musthave appropriate knowledge about organizational culture (Schroeder, 2015). This willdevelop their behavior and skills as per required context. Apartfrom the presence of effective internal control constitutes, it is necessaryfor management to formulate best internal control strategies. This can performby the companies through focusing on below-mentioned activities of the process:Formulation of a team andblueprint: In order to identify the best optionsto enforce internal control, the management of companies need to formulate aparticular team with the same motive. Apart from the team formulation, theyalso need to prepare a blueprint regarding how they will proceed further toselect a better optional strategy to enforce internal control.Perform regular Research:After the development of a team, eachmember needs to concentrate towards research activities (Zhu, 2016). With the help ofresearch, they can find best available internal control strategies.
Perform Selection: Theresearch activity creates a wide set of available options and internal controlstrategies. At last, the management needs to take a decision regardingselection of a particular activity for enforcing better control within internaloperations.So,it is right to say that good internal control will improve existing operationsand bring opportunities for getting success.
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