Arnon Dror is a very popular name in the world on international business and finance. This master graduate in business administration has over 20 years of valuable experience under his belt. During this career, he has the privilege of discharging the office of Vice-President in many companies. Xerox, Creo Inc., Scitex, Kodak, Creo Americas and Presstek are just some of these organizations. The officials of these establishments are grateful to him for turning the fortunes of their concerns. Almost all of them say he has an impressive track record in this area. They also acknowledge he specializes in many diverse fields. These include business acquisition, corporate merger, cash flow management, internal control, ERP integration, and international finance.
Arnon Dror – Are internal controls necessary for entrepreneurs?
This financial specialist says entrepreneurs spend most of their time operating their businesses. One area these businessmen give special importance to is accounting. They hire people to record the transactions of all their commercial activities accurately. This is to ensure the proper use and protection of the proprietors’ resources and assets. On the basis of this information, the owners may have to take very important decisions. They also lay down a system of rules for these individuals. The employees need to follow these guidelines to the letter while discharging their responsibilities. This is where internal controls come into the picture.
This professional explains entrepreneurs can’t run their businesses successfully without a proper system of adequate internal controls. Installing and implementing this mechanism is a necessity for them whether they like it or not. He points out the following three important reasons for taking such a step:
- Protecting vital business assets
Entrepreneurs need to take adequate measure to safeguard their business assets from potential risks. Such threats are generally in the form of inadvertent human errors, collusion, and frauds. These businessmen normally have complete trust in the people they hire. However, circumstances may change them. It won’t come to a surprise to anyone if some of these individuals resort to malicious activities. It could rise from greed or make ends meet. These businessmen know it’s better to be safe than to be sorry. This why they need to adopt the internal control technique of segregating responsibilities. One person shouldn’t authorize, record and verify the transactions of the concern.
- Reliable and accurate financial recording
Business owners need to take very important decisions from time to time. However, they can’t do this without up-to-date and reliable accounting data at their disposal. They need to know their concerns are performing any point of time. Only then can they make judgment calls on the right course of action to pursue. Maintaining and implementing proper internal controls provide these proprietors with all the information they need.
- Compliance requirements
All governments require businesses operating within their territories to maintain proper financial records. The officials of their regulatory authorities lay down guidelines on how entrepreneurs should perform this task. These businessmen need to follow such compliance procedures to the letter. Implementing a proper system of adequate internal control enable to fulfill such requirements.
Arnon Dror says implementing proper internal controls is a prerequisite to the success of any business. Entrepreneurs just need to look at the above three important reasons to take this vital step. It won’t take them very long to find out it is the right decision to take.