Internal Controls Essay Example | Topics and Well Written Essays - 250 words - 3

Internal Controls - Essay Example Lack of attention to the internal controls creates a business environment ripe for fraud, carelessness, and mismanagement and underutilization of business resources.An individual, staff member or external parties commit fraud. Fraud will occur when the internal controls set aside do not adequately fit the purpose to an extent that the fraudsters believe that suspecting them is impossible (Arwinge, 2013). Therefore, improper internal controls create an environment for a fraud that consequently leads to loss of business resources. The business may eventually become insolvent. Moreover, lack of proper business internal controls leads to bad decisions for the business (Leitch, 2012). Wrong decisions on financial matters of the business may eventually lead to the business becoming insolvent or bankrupt.Lastly, lack of proper internal controls leads to improper and inefficient allocation of resources. As a result, the managers spend a lot of time fixing the problems that could be avoided w ith proper internal controls (Arwinge, 2013). Consequently, a reduction in business output occurs compelling the company to shut its operations.Improper internal controls eventually lead to business closure. The management and staff should take it their responsibility to ensure that the internal controls in place are operational (Sebastian, 2011). The staff should report to the management staff any breach internal controls. The management should first establish a proper vertical communication to ensure that the employees report such incidences.