What is internal control? The objectives and significant roles of internal control

Internal control plays a highly crucial role in the development and growth of a company or organization. This position assists leaders in risk management and enhancing the business's effectiveness. So, what exactly is internal control? Why do businesses need it? What are the requirements for those undertaking this role? All will be clarified through the information below.

1. What is internal control?

Internal control is the organized set of plans, measures, and internal regulations within a business enterprise aimed at achieving its objectives, enhancing operational efficiency, and minimizing risks and unforeseen losses.

In other words, internal control is a collection of tasks that a business needs to undertake to prevent undesired issues. The internal control system is responsible for monitoring the organization, departments, and individuals within the business to prevent asset misappropriation.

The definition of internal control

2. Objectives and Roles of the Internal Control System

Currently, in Vietnam, business management practices vary widely. Some small businesses still operate in a family-style management approach, while larger enterprises often delegate responsibilities down the hierarchy, resulting in loose and incomplete controls, and even misunderstandings within the organization, leading to significant losses.

According to the COSO 2013 report, the internal control system encompasses three main objectives:

• Operational objectives: Demonstrated through the effectiveness of using human, financial and financial resources.
• Reporting objective: Non-financial and financial reporting to ensure openness and honesty
• Compliance goal: Comply with legal policies and corporate regulations.

Business owners do not need to worry because the control system that establishes an objective monitoring mechanism and regulations plays an extremely important role:

• Limit business risks such as product quality, work plan progress, wrong prices, etc.
• Accounting data and financial reports are recorded accurately.
• Helps protect assets from loss, damage and internal fraud and theft.
• Personnel comply with established regulations and administrators optimally use resources, creating trust with customers and partners.
• Enhance management efficiency. The regulations and goals set out have great business efficiency and bring high profits.

From the above practical issues, it can be seen that each enterprise must have a control apparatus with a large scope and diverse fields to operate effectively.

The objectives and important roles

3. Components of the Internal Control System

The elements that constitute a comprehensive internal control system are:

Control Environment:

The factor influencing the internal control activities is the creation of an environment in which all members support the importance of the system. The control environment is built upon five principles:

• Demonstrate a commitment to integrity, ensuring the organization's ethical and cultural values. Management is responsible for becoming a shining example for staff to follow.
• Superiors need to demonstrate independence and supervise system development and operations.
• Leaders establish a reporting process structure that achieves set goals.
• Enterprises make a commitment to employ truly qualified employees through appropriate recruitment processes.
• Specific individuals report at the request of superiors.

Risk assessment

No matter how large the business is, it is difficult to avoid internal and external risks. The introduction of an internal control system contributes to controlling that risk. Some effective risk assessment measures include:

• Management focuses on directing employees to recognize harmful effects when risks occur.
• Enterprises prepare solutions and backup plans to act promptly to minimize damage and major losses.
• Set specific goals and employees use them as a basis for implementation according to the correct order, plan, and regulations.

Control operations

Control activities include policies to ensure that regulations and directives of superiors are always implemented such as empowerment, verification, comparison, assignment of tasks, etc. Operational quality of internal control The department is likely to be successful if:

• Enterprises determine financial targets and management activities.
• Summarize and announce the results of work and production for each individual department. Then, compare the results with the set goals and make plans to supplement and adjust in the next time.
• Management authorizes and approves financial matters and this is separate from internal accounting.
• Regulations on who has authority to approve issues related to financial work.
• Enterprises are responsible for retaining evidence to clearly distinguish between work performed and supervision to avoid errors occurring.

Information and Communication

Communication involves interacting with relevant parties, both within and outside the business. The information system needs to ensure accuracy, quality, and ease of comprehension. There are three main types of information within a business: financial information, operational information, and compliance information. The quality of the internal control information system needs to ensure:

• The business regularly updates information for higher management.
• There is a hotline available for all personnel to report any abnormal incidents that may harm the business.
• The information system provides rapid and accurate responses to all parties.
• Security measures are in place to safeguard the important data of the business.

Supervision

The supervision phase in internal control aims to assess the quality and ensure the implementation and improvement of work processes. The supervision process will proceed smoothly if:

• The business has a reporting system that detects deviations from established regulations.
• The business rectifies errors once identified by the supervisory department.
• Supervision is carried out by highly skilled personnel.
• Errors and obstacles are promptly addressed and resolved by manager

The factor to create internal control system

4. Qualifications for Becoming an Internal Controller

Every business may have specific requirements for recruiting internal controllers. Below are some fundamental qualifications that individuals in this position should meet:

Strong Expertise:

Internal controllers are directly related to financial matters, so they need to have a solid expertise in finance, economics, business law, legal regulations, etc. Choosing formal education at universities specializing in accounting, auditing, finance, banking, and other relevant fields will help candidates acquire the necessary knowledge.

Read now: The newest criteria for internal audit manager recruitment

Proficiency in English and Computer Skills:

Proficiency in English is essential for various professions, including internal control, as it facilitates work-related tasks and the retrieval of information or documents in English. This is especially crucial when working in businesses with foreign investments or in an international work environment. Additionally, internal controllers need to be proficient in using computer tools and software to effectively manage their tasks.

Management and Control Skills:

Having management and internal control skills enables individuals to effectively oversee project processes and promptly assess the financial status of the company. These skills serve as a foundation for internal controllers to make predictions regarding challenges, risks, and opportunities for the business.

Analytical Skills:

Analytical skills are crucial for identifying and assessing financial, accounting, and managerial issues accurately. Furthermore, with precise analytical results, internal controllers can predict future developments, assess the likelihood of success or potential risks for the business, and evaluate the competitive landscape and market trends.

Communication Skills:

Internal controllers often represent the company in external interactions with auditing authorities to discuss important work-related matters. Effective and confident communication, as well as the ability to negotiate skillfully, ensures a smooth workflow for internal control.

Adaptability Skills:

The nature of the internal control profession can involve unexpected challenges and situations, making adaptability a valuable skill. For instance, when conducting audits, related documents may go missing, causing disruptions. In such cases, the ability to adapt quickly is essential to meet initial project timelines.

Critical and Logical Thinking:

Critical thinking involves maintaining a strong sense of inquiry, position, reflection, and the ability to counter opposing thoughts. Possessing critical thinking skills enables internal controllers to identify irregularities or losses within the company and report them to higher management for appropriate actions.

Sensitivity, Attention to Detail, and Honesty:

For internal control, sensitivity, attention to detail, and honesty are crucial attributes for addressing unexpected issues efficiently. Additionally, when reviewing and reconciling budgets, honesty and meticulousness are vital to identify errors and prevent regrettable mistakes.

Ability to Work Under High Pressure:

Internal controllers often handle a significant workload, particularly during the end of quarters or fiscal years when control requirements are at their peak. The demanding workload and tight schedules require individuals to develop the ability to withstand work-related pressure and perform effectively in high-pressure situations.

The needed requirement for this job

5. The salary and benefits of internal controller

Because of the highly specialized nature of the job, the salary of internal control staff is also quite good, ranging from 8 - 30 million VND/month. Depending on the size of the business, professional capacity, work experience,... this salary may change. Besides, there are many attractive benefits according to regulations and work units.

6. The chances of internal control job 

Every company, organization, business nowadays requires internal control to carry out all important things. So, the job opportunities are expanding, employees are not only working with domestic businesses but also choosing to apply for multinational companies with significant career advancement opportunities in the field.

The current salary and job opportunities

Recruiting Internal Controllers at Navigos Search

Internal control is of utmost importance for companies and businesses. In other words, candidates applying for this position must meet strict requirements in terms of skills, possess in-depth industry knowledge, and demonstrate proficiency in languages and effective problem-solving abilities. Therefore, finding potential candidates for the Key Account Manager position is a challenging task for many companies and businesses today.

Advice for organizations and businesses is to utilize headhunting services to quickly find the most suitable candidates for this role.

Companies can indeed find excellent candidates for internal control positions by using the services of Navigos Search. Navigos Search's strength lies in its team of recruitment consultants who are experienced experts with an extensive network of operations.

Navigos Search is a leading and reputable executive recruitment agency in Vietnam.

Based on an effective and professional recruitment process, our experts accurately understand the recruitment requirements of businesses to conduct searches, propose, and provide the most suitable and high-quality candidates.

Furthermore, with a pool of over 375,000 high-level candidates, including 85,000+ senior management candidates, and consistently maintained search results, Navigos Search is ready to meet the human resource recruitment needs for mid to high-level positions in any organization or business. With these outstanding strengths, the chances of finding talent for businesses will be higher, more precise, and faster.

Don't hesitate to contact Navigos Search if your business has recruitment needs for internal control or any other mid to high-level positions. We continuously strive to maintain our position as the leading talent acquisition service provider in Vietnam today.

Navigos Search - The leading mid to high-level headhunting company in Vietnam