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The 10 Golden Rules of Internal Controls

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1. Controls must help the organisation meet its objectives. They should ensure that positive results are achieved, not only that negative results are avoided.

 

2. Controls must save more than they cost: they must add value to the organisation.

 

3. Ignoring controls is not risk management: it is risky management.

 

4. Controls must be at the right stage. It is better for controls to prevent problems happening at all, rather than detecting them when the loss has already occurred.

 

5. Internal controls are everyone’s responsibility.

 

6. Internal controls rely on people. If people are not motivated to implement and support controls then the internal controls will fail. Motivating people is an essential part of controls.

 

7. Managers and supervisors cannot delegate away their responsibility for internal controls.

 

8. Controls work best when staff are encouraged to comment on and to help improve the systems

 

9. Internal controls work best when the accountabilities are clear.

 

10. Controls are not static. As systems change the internal controls should also change.

 

 

 

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For more tips, advice and practical pointers see Fraudproof Your Business Manual.