Question & Answer: create an internal memo to the entire staff to communicate the importance of i…..

MEMORANDUM
TO: All Staff
FROM: Managing Director
CC: Board of Directors
DATE: 00/00/0000
SUBJECT: Importance of internal controls in relation to the AIS
As the Financial statements become the face of the company, due care and accountability lies on the
company to prepare reliable Financial Statements. In this view, we request the staff to understand
the importance of internal controls in relation to the Accounting Information system of our entity.
A good system of internal control will help reduce errors and irregularities, Safeguard the
assets and help minimize the “opportunity” to commit fraud and comply with the applicable
laws and regulations.
Therefore it is important to design; implement, review and monitor a robust internal control
system in every department and function of our organisation. We acknowledge it as a
continuous process. Internal control is critical in the process of setting and achieving
operational, strategic, compliance and reporting objectives. The benefits of internal control
include:
1. Policies and procedures that provide for appropriate segregation of duties.
2. Reduction in the likelihood of deliberate fraud.
3. Qualified Personnel perform their assigned responsibilities
4. A system that ensures proper authorization and recordation procedures for financial transactions
is in place.
Internal control should be based on a systematic and risk-oriented approach so that the high risk
areas are under appropriate controls and low risk areas are not burdened with excessive controls.
Maintaining this balance requires a thorough cost benefit analysis i.e., analyze the costs of
establishing and maintaining controls, and also the potential benefits the control will provide as also
the possible consequences of not implementing the controls.
Since our company is heading to increased automation and digitalisation, it is important that we
implement enough controls for the data security as well.
Internal controls may change with changes in business environment and circumstances or the
processes and procedures for which controls were created may change, rendering them less
effective or ineffective. Because internal control is effective only when properly designed and
operating as intended, we need to monitor the quality of our internal control’s performance over
time. Effective monitoring helps ensure our system of internal control continues to provide the
protections we envisioned.
Thus we request the employees to appreciate and embrace the need and importance of internal
control for a robust Accounting Information system of our entity.
Please visit your login on our company website for more guidance and information on internal
controls.