Category: Accounting

The era of modernizing is the real world where most of the businesses are seeking flexible frameworks & reliable innovations for their progress. Where most of the accounting industries are amazed by innovations like cloud computing & online working portals, a majority of users residing in the same industry aren’t aware of its complexities. For already accessing users of Intuit’s QuickBooks desktop editions, integrating data to web-based software approach seems to be one of the most exquisite options for excelling in the marketplace.

Fortunately, the cloud-based QuickBooks give ease-of-accessing data over cloud network, ease-of-operating files from any device & OS and ease-of-collaborating with team members from anyplace & at any time but still lacks many features that are required by a QuickBooks desktop edition user. In order to host QuickBooks desktop edition to cloud network, an authentic hosting provider is a must who installs & manages software & company’s data files on their cloud-based servers.

It is true that user will no longer need to install QuickBooks software on their PC, as the Internet is enough to access both, software & data files on server’s cloud network. Though, after having this much ease, the user still needs the initial underlying technologies i.e. Windows on the local machine & QuickBooks software.

Distinct from True SaaS or Cloud-based Application Approach!

QuickBooks hosting is somehow a different approach from that of SaaS or cloud-based based applications. SaaS, Software as a Service is a web-based application solution or model where a single application and data framework is available which serves almost all users. For particular software, the web-based application can be taken as a service and the exact infrastructure in support is hidden from the user. On the other hand, hosted QuickBooks service works with its initial QuickBooks desktop editions as designed by Intuit. So the initial requirements including the PC-based installation of software, deployment of the application as per user & consumption of more resources will be still there with the cloud-based hosting approach.

Eventually, SaaS is a cost-efficient architecture for users in which functionalities like system redundancy and fault tolerance are inbuilt in the solution itself. Whereas hosted QuickBooks approach is comparatively higher and offers complexity to its users.

Choosing the Right & Wise Move for Your Business!

Users who are considering shifting from locally-installed QuickBooks to hosted QuickBooks desktop editions as a wise move might fall abruptly if continues without embracing the right volume of knowledge. Yes, that’s true! The shifting is proving beneficial for most of the businesses but only for as long as they aren’t getting aware of technologies like SaaS. Usually, for both small-sized & medium-sized businesses, it is advisory to cognize the depth of perks before fascinating with the width of features.

There are numerous other perspectives which are predicting the concept of hosting with QuickBooks application, which is complicating the process of being a web-based cloud network business:

1. Issue of Licensing: Licensing is the hardest task to convey by any third party service providers as installing the authentic software licensing level & give proper set-up to multiple levels of software asks preciseness which is somehow difficult to offer by all. Many times the service provider implements the same procedure in order to fulfill the installation process and doesn’t focus on a particular business needs which provide a generic setup to each user unwittingly.
2. Verdict of Third Party Applications: Intuit itself checks each company before allowing them to offer hosting services to QuickBooks users. The companies are thus authentic to Intuit and are often known as third party service providers in the market. It is mandatory to evaluate the risks that might conquer while integrating your business data with any hosting provider. The risks are majorly confronting the users only when platforms and hosting software aren’t fully licensed.
3. Maze of Multiple User Performance & Number of Servers: Initially, the QuickBooks desktop version wasn’t designed to run by multiple users over single PC until the presence of QuickBooks hosting comes in the notice. Many times while working on the same cloud-network it is quite hard for multi-users to get their command done as less availability of command-handler makes the workability strict and thus takes much time to complete the task. Hosting provider, in order to solve the scenario, allows more servers to the same number of users being in the working environment- which subsequently make the task delivery process complex & expensive.

So these three main practices that mostly become complications for third-party hosting providers are the reason making QuickBooks hosting a complex process for most of the businesses. The integration goes inflow until the user itself gets acknowledged with any scarcity of provider. But once the user gets to know his worth, he finds the whole process complicated.

The Evolution of Business

Gone are the days when businesses were local, and they derived their material resources from relatively close locales, with the labor pool consisted of the nearby residents. Limited mass transportation and slower communication inhibited a fast-paced business environment in those days.

However, over the last century technology increased the pace of business to the point where today’s companies secure resources from halfway across the globe in a matter of days, and the once inaccessible human resource now performs duties virtually from the other side of the world. Out of this break-neck speed of business came the birth of globalized commerce, a phenomenon where more transactions occur on a larger, worldwide scale thanks to the help of technology and innovation connecting businesses all over the world.

The Tax Effect

Because certain locations allow for lower costs of doing business, corporations realize more net revenue, which should translate into increased taxable income. However, increased revenue does not necessarily translate into taxable revenue if the organization is maximizing profit by reducing net income tax expense by conducting business where the tax rate is the lowest. When this happens an economic phenomenon called “race to the bottom” occurs (Dreher). Governments reduce tax rates to encourage corporations to locate to their country to do business, thus increasing their economy.

Tax loopholes contribute to a decrease in corporate income tax revenue (McIntyre). Theoretically, these companies should be taxed in both their base country and the target country, which is called double taxation (Lentz). However, double taxation agreements limit double taxation by providing an arrangement where countries do not subject foreign income to double taxation in more than one national taxing jurisdiction. Global taxing agencies enact these agreements to entice companies to do business within their borders to increase their local economy and boost their markets.

There are also other ways to get around taxation. Often a country will enact tax holidays (Lentz) as an incentive for companies to do business within their borders. Tax holidays allow respites from paying taxes during certain times of the year. A “tax haven” (Lentz) is another simpler method of tax manipulation allowing companies to house their revenue in locations where taxes are extremely low and sometimes even non-existent. “It is estimated that the top 500 U.S. companies would owe an estimated $620 billion in U.S. taxes were it not for the more than $2.1 trillion in offshore cash that most of the firms hold in foreign tax havens” (McIntyre).

Countries are businesses as much as the corporations that operate within them. Globalization provides companies the mobility to transact business to different geographic areas with ease. Therefore, countries compete for and attract foreign business by making it cost-effective for corporations to transact business in their country through decreased taxation. When taxable organizations transact their business in locations other than their homeland, they are redirecting tax money that, under non-globalized operations, would be infused directly into the base country’s economy. A result of this redirection is that the homeland creates revenues for its government by replacing the burden of lost tax-generated funding on the individual citizens.

Globalization affects individual taxpayers by providing a means for other countries to seduce tax-paying corporations to conduct business with them by reducing their tax expense. Citizens are burdened by increased income taxation to make up the difference of lost corporate tax revenue needed to maintain the well-being of the economy.

Concerns

As a college student who is getting ready to enter the workforce, having additional individual tax burdens worries me. At a time when our national economy is hurting, many companies are skirting their own nation’s tax needs to pay less tax in another country, yet they still generate profits each year. Many individuals argue that a portion of these profits should be going directly into the base nation’s economy rather than more tax advantaged countries. Globalization allows the redirection of revenue and therefore redirects the burden of tax revenue on the homeland’s citizens, even though they may not be a part of the problem.

Works Cited

Dreher, Axel. “The Influence of Globalization on Taxes and Social Policy: An Empirical Analysis for OECD Countries.” Sciencedriect.com. European Journal of Political Economy, 4 Mar. 2004. Web. 17 Nov. 2016.

Kumar, Manmohan S., and Dennis P. Quinn. “Globalization and Corporate Taxation.” http://Www.imf.org. N.p., Aug. 2012. Web.

McIntyre, Robert S., Richard Phillips, and Phineas Baxandall. “Offshore Shell Games.” (2015): n. pag. Citizens for Tax Justice, Oct. 2015. Web. 17 Nov. 2016.

Lentz, Lexi. “B&E | Positive and Negative Effects of Globalization on Taxation.” IndraStra Global Master. IndraStra Global, 27 Apr. 2016. Web. 01 Nov. 2016.

Remote working is no longer just a trendsetting buzz-word that businesses were seen leveraging recently. It has become slightly more than that. Until a few years ago, business owners were often compelled to hire an underqualified and under-experienced staff owing to the lack of skilled personnel in close proximity. However, the cloud happened and times have changed since.

Most of us have heard how the market giants like IBM are promoting the work-from-home policy. These days, many employees, and not just the females, have the luxury of working from remote locations. When you try to dig into the reasons, there are two prominent factors that come into play-

1. It helps save the operational cost. Fewer employees on the floor mean reduced expenditure on hardware, software, and overall employee maintenance.
2. It gives firms the option to hire a highly qualified candidate, irrespective of the geographical barriers existing in-between.

How is the Remote Working Structure Helping the Accounting Industry?

There is no doubt about the fact that the remote working structure has given accounting the makeover it needed. But what exactly are the positives of the cloud entering the accounting industry? Let’s discuss:

Environment and Efficiency Goes Hand in Hand

The cloud is not just technology that introduces efficiency in the accounting process. Of course, making entries on the heavy ledgers, maintaining the sheets, and jotting everything down is a huge deal for accounting firms. With cloud-based applications and services, firms have not only enjoyed a time-saving day-to-day process but have also witnessed a considerable reduction in errors.

However, what is even more appreciable is the fact that businesses have gone a lot more environment-friendly with the help of cloud technology. Not only do these cloud-based apps require no paper to function, but they also have promoted the idea of having a work-culture where the need for hardware is reduced to the minimum possible amount. Having everything on the cloud, handled by one cloud-services provider, firms do not need to have their own, elaborate, in-house IT infrastructure. This means reduced consumption of hardware and ultimately a reduced amount of IT waste. After all, a technology that favors the planet, favors all.

Helping the Modern Accountant Be

It is not only the firms that have gone global, but the modern accountant has also followed suit. Unlike the olden days, where accountants would pay regular visits to their client’s offices and run them through their accounts and bills, the professionals today can do it all sitting in their own office or even at home.

The cloud-hosted accounting applications such as QuickBooks hosting, have given the accountants and their clients the option to work in collaboration, round-the-clock, irrespective of their geographical locations. All they have to do is to have their data stored on a cloud-based app and share the credentials with their accountants to be able to access their files. So, being physically present as the traditional accountants- not that necessary anymore.

Tax Filing Errors Reduced Considerably

Tax filing season is tough for most business owners and quite understandably, for their accountants too. The culprit clearly is carelessly handled financial records. The cloud-based accounting systems do most of the heavy-lifting themselves, allowing accountants to have a smooth-running tax season. With everything appropriately documented, all in one place, the chances of accountants missing out on or overlooking a taxable value are significantly reduced. This allows accountants and/or tax professionals to accurately compile reports and also improve the chances of seeking tax reductions, owing to the clarity in reports.

Overseas Clients, Check

How often do you seek advice from doctors practicing overseas? Or take up an online course because it is not available in your area? Well, we all know friends and family who opt for cloud-based services for a slew of day-to-day needs. Similarly, with the help of the cloud, firms, individuals, and business owners can hire a remotely-located accountant to handle their finances and accounts. As already discussed above, clients and their accountants can conveniently collaborate with the help of the cloud, irrespective of the difference in their current locations and time zones.

And, Lastly

Innovation in accounting has positively affected the accounting industry in more ways than we have discussed above. Although the four areas mentioned above can be seen prominently, other benefits tag along with them. Anyone who has first-hand experience working in the cloud understands that cloud is not just a trend but also a necessity. Any firm, whether big or small, that needs to introduce a technological push in their process without spending a fortune, can go for the cloud right away.

For accountants or accounting businesses, a major question always comes to haunt, how to succeed in the digital age when the business has to be more responsive to get an additional edge. This is a logical question and as a business owner, we must respond so that our services are enough competitive to meet the demand of dynamic marketplace. Traditional accounting practices have flourished over the years and have shifted from providing general bookkeeping services to advisory work while delivering higher value services to the valuable clients. It doesn’t require overall changes to our accounting practices, instead if we can bring in some modern approaches to the current accounting practices, we can definitely transform our business to the smart accounting. It not only helps us to serve more clients, but also gives us the important factors like: efficiency and a great level of accuracy that ultimately establishes us as trusted professionals.

Below are the advised changes that an accountant must think of:

1- Efficient Scanning Utility:

Gone are the days of collecting and carrying client’s documents, giving nightmares to the CPAs and accounting professionals. This is the time to subscribe for an efficient scanning utility that is capable of scanning and uploading the documents to some online location in the more manageable way and using digital format. No worries for the clients to send their papers, since they can directly scan their documents to their CPAs online destination within a few seconds. It drastically reduces the time and gives ultra flexibility to the professionals as well as the clients. Nowadays, document managers already in place to efficiently manage various documents in more manageable way.

2- Adequate Printing Function:

Printing is a frequently used task for a dynamic business and for accountants, comprehensive printing solution is an absolute must, since ordinary printing utilities will not be able to cope with the high demands of multi-platform printing. Usage of cloud computing for accounting operations makes it even more compulsory to have an efficient multi-function printing utilities that can also deal with remote printing tasks. General accounting itself consists of different kinds of printing jobs like: checks, invoices, reports, bills, etc. and again it needs an adequate printing solution to complete these jobs comfortably.

3- Online Storage:

We can’t carry our documents all the time with us but we may need it at any point of time. An online storage helps us to save our documents at some cloud location and we can easily view or download them as soon as we need. Online storage works perfectly whether we use in-house servers and clients or we use cloud based platform to use our accounting applications. Though, we should understand the fact that the applications can not run over online storage. It is just to store our data so that it is accessible from any platform, device and location.

Once our business reaches to inflection and we don’t find enough pace to counter the latest trends, we must consider of using technologies to generate a new momentum. Cloud computing, online storage, printing solutions, scanning options are some very important elements that can help us to differentiate yourself from others.

Identify your Needs

When it comes to small business accounting software, you need to find your needs. This will help you match up with the right program. You need something that can help you take care of specific tasks for your business. If you sell goods, one with inventory controls can be very useful. It can help you cut funds tied up in inventory but also prevent you running out.

Security

It is important to think about the security features the program offers. You may have sensitive information in there and you need to know it isn’t going to be compromised. Don’t overlook this when you are comparing programs to decide what is the better overall value to you. Find out if they offer you regular updates for security too.

In addition to security, a program offering you customer support is very helpful. They can help you to access features, troubleshoot, and to gain information on something you aren’t familiar with. Some programs have online training and videos too that can help you decide if it is a good match for your business.

Customised Reports

Your business will need a variety of reports to check where it is doing well and what needs to be improved. In addition to the common business reports, look for small business accounting software that allows you to customised information. Then you can create specific reports that relate to your business in very little time.

Such information can help you with comparisons, analysis, and with presenting information to your board or to financial backers. It can be a way for you to determine expanding your business or where you need to make some changes to help your business do better. Being able to track your overhead expenses can give you facts to determine where you can make reductions.

Easy to Navigate

The features offered with small business accounting software can vary based on the specific program. Identify the features you need and think about those that may offer you value. If you can work with some demos, that will show you what can be done with particular features. Look for a program that is easy to navigate. The value isn’t going to be there if it is hard to work with.

In addition to navigation, look for a small business accounting software offering some internal checks and balances. This will help to cut the risk of accidental errors. It can help to give you some security against internal losses due to fraud. You can’t be too careful when it comes to what is happening in your business.

Future Needs and Growth

Where is your business headed? Think about the future and the growth you would like to experience. Think about your goals for changes and even new products or services you wish to carry out. You need small business accounting software that will be flexible enough for you to change what is set up as your needs change.

This will prevent you from buying something that you have to replace in the near future. A program offering ongoing updates will last because technology can change often. Take your time to find a good fit for your needs and the type of business you run. It will allow you to run this side of it efficiently and securely.

The use of cloud technology in the accounting sector is gaining significant traction with time. The perusal of cloud accounting is in works for businesses of all sizes and walks of the industry. Expanding the cloud market rather rapidly.

Many reports have stated that a large chunk of accountants are shifting their businesses to the cloud. Some even quote that it’s as large as 53% of the industry. They’re in unanimity that cloud computing has made their tasks significantly easier.

But with the surge in the adoption of the cloud, the challenges concerning security are rising simultaneously. Yes, performance has increased, but it is difficult for smaller firms to find the best QuickBooks cloud hosting plan to suit their business strategy. There is a galore when it comes to options but with those options, the aspect of security and performance has to be given equal attention.

Let us now know why security and performance are important factors when it comes to QuickBooks cloud hosting:

Apprehending Cloud Security for QuickBooks Hosting

Security in the cloud is inevitable to ensure that QuickBooks software is safe. While your data is more secure in the cloud as compared to the traditional method of storing data, it is only intelligent to understand the security aspect in the right context.

There are procedures, certain policies, system control, and technology, which when put together, help protect the data and infrastructure. Procedural implementation of these measures helps in safeguarding the clients’ privacy and keeping intact the security and authenticity of the data.

Security in the cloud, while hosting QuickBooks, can be configured in accordance with business requirements and size, nature of the business. Factors like traffic and multi-user authentication can also be put into arrangement.

As cloud hosting is managed unilaterally, it eliminates the need for a dedicated administrative team, thus cutting down operational costs significantly. Therefore, we see that it is quintessential to choose a QuickBooks cloud service provider offering best-in-class security, which is customizable as per your individual business requirements.

Zero Down On A Cloud Provider That Ensures Apt Security

When selecting a cloud provider to host your QuickBooks software, look for one that gives you an option and control as to where your data is stored and managed. You should be well informed by your cloud provider about the location and capacity of their data centers.

Do not skip on evaluating whether or not they provide proper data encryption. Critical data should be encrypted so as to avoid data accessibility to unauthorized users. Be well-read of your hosting provider’s security policy to decide if they are in alignment with your firm’s business approach.

Debunking Cloud Security Myths

As more and more accounting firms are moving their operations to the cloud,

there are a few inevitable concerns and myths which come up around its security.

These are some of the common myths related to cloud security:

MYTH- Public cloud isn’t secure

FACT- When cloud technology was first introduced, people were concerned about the level of data security that would be associated with it. Now, as a pleasant outcome, this is not a concern anymore, given the performance that the cloud has demonstrated.

With decades worth of market presence, QuickBooks cloud hosting providers have invested significantly in security measures and for the use of updated technology to make sure that your data is rendered the best notch of security that there is. QuickBooks providers can now backup data in different geographical areas, which makes them way more reliable and secure as compared to on-premise data storage.

MYTH-Anyone can access the data in the cloud

FACT- Losing control or data leak or mishandling of data are some of the major concerns people have while migrating their QuickBooks software to the cloud.

However, data privacy is one of the prime benefits offered by cloud technology. It is way more difficult for hackers to debunk data that is stored in the cloud as compared to on-premise or physically stored data. Popular research showed that 95% of failures in cloud security would be because of the end-user and not because of the data being stored in the cloud or remotely.

MYTH- It is easier for hackers to attack data in the cloud

FACT- It’s a common assumption that as cloud providers maintain and manage a number of data sources and data modules at once, each individual’s data is prone to breach and is more vulnerable. On the contrary, truth holds as most reputed cloud hosting providers adopt best in class security measures, such as fully-clustered multi-tier cloud infrastructure backed by 256-bit encryption and 24-hr network monitoring. All these security protocols make your data more secure and under better surveillance.

Decoding Cloud Performance for QuickBooks Hosting

The performance of an accounting firm or the user experience of a particular software largely depends on the performance of the cloud. Choose a provider that can deliver steady yet sporadic performance at scale.

Some of the key parameters in cloud performance that firms should look out for, prior to hosting QuickBooks on the cloud:

a) Scalability and Elasticity: Elasticity and Scalability offered by QuickBooks on the cloud helps reduce the overall business costs and provides ameliorated performance.

These factors can be evaluated through bandwidth, servers, and data warehouses. The cloud provider’s short and long-term strategy and service level should also be kept into perspective consideration.

b) Flexibility: This becomes a significant factor when evaluating the performance of a cloud provider. It’s desirable that the migration of applications to the cloud be cost-effective and convenient. There should be flexibility in terms of operating systems, databases, and programming models.

c) Downtime Issues: The foremost agenda when migrating a business to the cloud is to have undenied round the clock access to work, so as to increase productivity by multiple folds. For this, it is more than necessary that there be minimum downtime. Evaluate the cloud provider’s performance against their SLAs for the past year. Perfection can’t be expected as downtime is inevitable and all cloud providers face it, but it should be as less as possible.

d) Disaster Recovery: All this while we have been talking about data security. Data security becomes the prime issue when a premise or a data center is hit by a disaster or a mishap. This is where a cloud provider’s data recovery module comes into play. While evaluating the QuickBooks cloud provider, learn about their backup systems, contingency, and recovery in case of failure. Ask them how much time it takes for data retrieval and whether or not they have multiple recovery stations at varied locations.

A Word To Infer

Moving to the cloud is smart, but it is smarter to be smart when choosing your cloud provider. Peruse and Pick! Thorough research and planning makes sure that the QuickBooks cloud provider you choose, provides the performance and security that fits your bill and your needs of safeguarding your data, and that they’re secure enough for you to trust them.

How do firms choose their strategic control systems? What is the nature and function of strategic control systems? What are the critical elements of strategic control systems? What is the nature and function of internal control systems as critical element of strategic control systems? These strategic policy questions relate to the role of optimal organizational internal control systems, processes and procedures designed to create and sustain operational performance excellence that maximizes the return on investment and shareholders’ wealth while minimizing risks exposure and the cost of operations, simultaneously.

Clearly, effective internal control system is correlated with optimal operational performance excellence and critical to sound organizational systems and strategies designed to maximize the wealth producing capacity of the enterprise. In these series on organizational performance excellence, we will focus on the pertinent strategic control system questions and offer some operational guidance. The overriding purpose of this review is to highlight some conceptual framework, quality management theory and practice, strategic relationships, and industry best practices. For specific financial management strategies please consult a competent professional.

Internal controls as integral part of the strategic control systems is interrelated series of activities imposed on the standard operating procedures of an organization, designed to safeguard assets, minimize errors, and ensure that operations are conducted pursuant to standards. While strategic control systems establish standards and methods for measuring performance, determine whether actual performance matches the standard-expected performance, and execute corrective action, internal controls are designed to mitigate the level and types of risks to which an organization is exposed.

Further, while control systems ensure operational effectiveness, control activities frequently slow down the routine process flow of business operations, which may reduce its overall efficiency. Consequently, the design of internal control systems requires management to balance risk mitigation with operational efficiency. This process can sometimes result in management accepting a certain amount of risk in order to create a strategic profile that allows an organization to operate more efficiently and effectively, even if it suffers occasional losses because controls have been deliberately reduced.

Additionally, all organizational strategies subject to constrained optimization have costs and benefits. The critical question is: Do the benefits justify the costs? In practice, executive leadership applies the net present value approach to weigh the costs and benefits of structures, systems and strategies. The optimal option maximizes the net benefit by equating marginal costs and benefits.

Some Operational Guidance

In general, no organization is immune to misappropriation, embezzlement or corruption-whether it’s inadvertent or deliberate. Many organizations don’t assess misappropriation or corruption threats until they have already occurred. Effective internal control systems should be designed to mitigate the level and nature of risk which organizations experience. In practice, as integral part of internal controls, organizations leverage technology-enabled solutions to scan across the entire spectrum of operational risks, promptly.

The ability to identify potential high-risk internal and external transactions quickly before they adversely impact organizations is critical to optimal internal control systems designed to create and sustain operational performance excellence derivative of business intelligence, risks mitigation, data analytics and evidence-based knowledge driven effective organizational systems, processes and procedures.

Moreover, internal controls should provide the mechanisms, rules, and procedures implemented by organizations to ensure the integrity of financial and accounting information, facilitate accountability, and mitigate fraud and the entire spectrum of operational risks. Besides complying with laws and regulations, and preventing employees from misappropriating assets or committing fraud, internal controls should facilitate operational efficiency and effectiveness by improving the accuracy and timeliness of financial reporting. Effective internal control objectives should include regulatory compliance, accuracy, validity, physical safeguards, and error mitigation. Control procedures should include separation of duties, access controls, random physical audits, standardized documentation, trial balances, periodic reconciliations, and approval authority.

Controls should always include policies and procedures put in place to ensure the continued reliability of accounting systems. Accuracy and reliability are paramount in the accounting systems. Without accurate accounting records, managers cannot make fully informed financial decisions, and financial reports may contain devastating errors. Control procedures in accounting should be broken into several categories, each designed to prevent fraud and identify damaging errors before they become problems or crisis.

Control system should fully address regulatory requirements, meet stakeholder expectations and protect organizations from potential catastrophic financial and reputation damages. When properly deployed and integrated, organization’s risk mitigation, anti-misappropriation, anti-bribery and anti-corruption technology-based solution should use digitally enabled analytics and advanced monitoring tools to help organizations scan across the compliance and operational risks spectrum, so they can more intelligently anticipate, mitigate and manage risks.

While smaller organizations with limited resources cannot always afford elaborate internal controls including segregation duties and decisions, system of internal controls tends to increase in complexity as organization increases in size. Establishing standards and methods for measuring performance; determining whether actual performance matches the standard-expected performance; and taking corrective action should always be integral to effective internal controls.

Finally, internal control is most effective when it is embedded and supported by a culture of assessment and continuous improvement. Therefore, effective internal control should consist of an integrated process for assuring organization’s objectives in operational efficiency and effectiveness, reliable financial reporting, and compliance with laws, regulations and policies are being met. Controls should include effective use of firewalls and encrypted passwords that limit internal and external access to critical business intelligence, proprietary, accounting and other financial information. Systematic measurement, analysis, and knowledge management require internal control results to be collected, analyzed and used for continuous improvement.

In sum, control systems should provide processes and procedures by which an organization’s resources are directed, monitored, and measured. Internal control system should include human elements such as board of directors exercising effective oversight and independent internal auditors conducting random periodic audits and unscheduled verification. Control systems, processes and procedures are critical in detecting and mitigating high risk activities and preventing various types of misappropriation and protecting the organization’s resources, both tangible and intangible resources.