The importance of effective communication in Internal control systems
Internal controls are an important aspect of any business, as they help ensure the accuracy, reliability, and integrity of the company’s financial information, as well as compliance with relevant laws and regulations.
A common misunderstanding is that the internal control system is mostly documenting and formalizing controls through policies and procedures followed up by testing on a regular basis. However, the most important components in an internal control system are how management and employees across your organization take action and communicate in an efficient manner. All other internal control components are dependent upon relevant, quality information that is supported by the Information and Communication component, and a user-friendly GRC-software should be a cornerstone of improving organizations’ information and communications related to internal controls.
Corporater Internal Control System software can help monitor the entire system of internal controls.
Transforming and improving the internal control system
Technology-enabled transformation of organizations accelerated during the pandemic and the trend is expected to continue. Many organizations have taken action and embraced technology for internal control systems, and a recent study conducted by KPMG Germany showed that more than half of organizations leverage a specific technology solution to support internal control documentation and testing.
Technology can not alone transform an internal control system but needs to be aligned with other drivers for change such as processes, data governance, and people. This includes identifying the skill sets and resources needed to sustain the effectiveness of internal control across the organization, including skills needed to address non-financial objectives to increase control effectiveness. When these factors are all considered, a transformation and improvement project for the internal control system should be considered.
What should be considered when selecting technology for internal control systems?
A GRC-software for an internal control system should:
- enable an efficient method for assessing the effectiveness of its internal controls, identify any gaps or inconsistencies, and develop strategies to address them.
- Improve information and communication related to internal control, by providing a centralized platform for storing and managing information
- automate the flow of information within the organization
- facilitate communication and collaboration among relevant stakeholders
- have intuitive user interfaces
- flexible set-ups for dashboards and visualizations for monitoring purposes
- integrations with risk, compliance, policy and incident management
- alignment with strategic initiatives and performance goals
Corporater supports all the above-mentioned internal control technology capabilities and will provide a tailored internal control solution that will help your organization transforming and improve its internal control system.
Read more about Corporater internal control solution here.