What are the dangers of not having effective internal controls?
Ken Blake
Certified Public Accountant (C.P.A.)
Transcript:
Okay, what do we mean by "internal controls"? Primarily what we are tying to establish is ways of making sure that the business assets are not squandered or otherwise lost through loose accounting procedures. There are a number of areas that internal controls are really important: primarily in the area of inventory and also in the area of sales and cash management. For instance, you want to make sure that you take a physical inventory on a not too infrequent basis. Monthly would be great, quarterly would be not so great but it's still better than just an annual one. This allows you to match up what you think you have in inventory verses what you really have and can identify any shortages.
