Management is responsible for establishing internal controls. In order to maintain effective internal controls, management should:
- Maintain adequate policies and procedures;
- Communicate these policies and procedures; and
- Monitor compliance with policies and practices.
Responsibilities of management include, planning, organizing, directing and controlling. Controlling, including monitoring, is a process to ensure what is supposed to be done is being done. Control activities are the policies and procedures, which help ensure that management directives are carried out and include, but are not limited to the following:
- Authorizations – Transactions must be authorized and executed in accordance with management’s intent.
- Segregation of Duties – Segregation of duties is adequate when no one person is in a position to initiate and conceal errors and/or irregularities in the normal course of their duties.
- Record Keeping – Adequate record keeping ensures that assets are properly controlled and transactions are properly recorded as to account, amount and period.
- Safeguarding – Limiting access to and controlling the use of assets and records are ways to safeguard those assets and records.
- Reconciliations – Reconciliations are independent verifications, which help to ensure that the other four control activities are functioning as intended.
Business planning.
A business plan is a document that defines in detail a company’s objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing, financial, and operational standpoints. Both startups and established companies use business plans.
A business plan is an important document aimed at a company’s external and internal audiences. For instance, a business plan is used to attract investment before a company has established a proven track record. It can also help to secure lending from financial institutions.
Furthermore, a business plan can serve to keep a company’s executive team on the same page about strategic action items and on target for meeting established goals.
Although they’re especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to reflect goals that have been met or have changed. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.
We can say:
- A business plan is a document describing a company’s core business activities and how it plans to achieve its goals.
- Startup companies use business plans to get off the ground and attract outside investors.
- A business plan can also be used as an internal guide to keep an executive team focused on and working toward short- and long-term objectives.
- Businesses may create a lengthier traditional business plan or a shorter lean startup business plan.
- Good business plans should include an executive summary and sections on products and services, marketing strategy and analysis, financial planning, and a budget.