Many companies, especially smaller startups, can make the mistake of viewing risk management controls as a waste of time and resources that unnecessarily slows the company down. But this couldn’t be further from the truth. When implemented correctly, internal controls allow a company to protect itself and build critical trust with customers, investors, employees and regulators. In today’s constantly changing world, business leaders who excel in risk management will be in high demand.
Those interested in pursuing a career in accounting as it relates to risk management would benefit from pursuing an advanced degree, such as a Master of Business Administration (MBA). This degree will not only teach you the basics of risk management but also help you understand how internal controls can enhance a company’s efficiency overall.
Strengthening Financial Integrity With Internal Controls
VComply defines internal controls as a set of policies and procedures an organization uses to ensure the integrity of financial and accounting information, promote operational efficiency and prevent fraud. These controls help the company identify potential risks before they happen while also adhering to compliance standards. There are five main reasons that companies implement these controls:
- Ensure the accuracy of financial and operational information
- Comply with laws and regulations to avoid punitive measures
- Manage and mitigate risks
- Build trust and confidence with key stakeholders
- Enhance the organization’s accountability
In short, implementing internal controls is a key way for a company to protect itself against fraud, threats and other risks. Additionally, using controls sends a signal to key stakeholders that the company takes security seriously.
Implementing Internal Controls
Implementing a set of internal controls doesn’t need to be overly complicated. A few easy ways to enhance your company’s risk management include segregating duties, assigning specific takes to certain people and conducting regular audits. By breaking up responsibilities and creating a record of who does what within your company, you will be in a much stronger position to hold people accountable.
If you’re looking to establish a set of internal controls, Jade Global recommends four key steps:
- Establish an appropriate control environment: Conduct an audit of your existing personnel, systems and software. Understanding these three areas will make determining what internal control system will work best for your organization easier.
- Conduct a risk assessment test: Identify and evaluate any risks that might already exist within your business to ensure that your new system addresses these risks.
- Implement control activities: Deploy your controls and communicate the necessary information and responsibilities with the correct personnel.
- Monitor and adapt: Once you’ve implemented your controls, you must monitor them consistently. Additionally, you should also consider performing periodic reviews to ensure that everything is operating efficiently.
To achieve this, many companies enlist the help of risk management accountants, auditors or other specialized personnel. If this is an industry you are interested in entering, then obtaining an advanced degree can help separate you from the crowd.
Leveraging Technology for Robust Accounting Controls
When it comes to implementing a risk management system, companies can implement controls that are either manual or automated. Employees within the company control manual controls, while automated controls are built into the company’s software applications. Usually, the best option depends on the nature of the business and what needs monitoring.
Experts at Deloitte suggest that automated preventative controls might seem like the logical choice for most companies since these controls do not allow for human error or variability. However, computerized controls also come with incremental costs. Usually, these costs are associated with the purchase and implementation of software. For this reason, many companies leverage a combination of automated and manual controls to get the job done effectively while also keeping costs low.
Furthering Your Career in Risk Management
Every year, the world grows a bit more complex as technology continues to accelerate rapidly. In particular, generative artificial intelligence now poses a significant risk to many businesses. With this in mind, there will likely be a growing need for talented risk management professionals over the coming decade.
If you have obtained a bachelor’s degree in accounting and are looking to separate yourself from other working professionals, then you might want to consider obtaining a Master of Business Administration. Some MBA programs even specialize in fields relevant to risk management. For example, the University of Northern Colorado offers an online MBA program focused on Accounting Analytics.
In this program, students will complete core accounting classes as well as courses like Fraud Analytics, Ethical Leadership and Organizational Behavior, and Managerial Accounting. Students can complete this program fully online in as few as 12 months and begin applying accounting analytics to real-world business challenges.
Learn more about the University of Northern Colorado’s online Master of Business Administration with a Concentration in Accounting Analytics program.
