Internal controls are a cornerstone of financial systems, yet they are often misunderstood, undervalued or viewed as unnecessary burdens. Many organizations treat internal controls as mere suggestions, adding unnecessary paperwork or headaches for employees. This attitude, however, overlooks their critical role in safeguarding an organization’s financial health, especially during those pivotal moments when things can and do go wrong.

In my 15-plus years as an auditor traveling across the United States, I have seen internal control systems that flourish and others that falter. What distinguishes successful systems is not just their design but the attitude of the people behind them. Organizations that embrace internal controls and view recommendations as opportunities to improve tend to have stronger systems that mitigate risks effectively. Conversely, organizations where internal controls are dismissed as an unnecessary burden often experience breakdowns, some of which lead to fraud or significant financial errors.

Why Internal Controls Matter

At their core, internal controls are designed to ensure the integrity of financial reporting, safeguard assets and improve operational efficiency. They serve as the backbone of any accounting environment, ensuring that accounting systems function properly over time.

Breakdowns in internal controls can have dire consequences, including:

• Fraud: Without proper controls, organizations are more vulnerable to fraudulent activities.
• Errors: Mistakes in financial reporting can lead to regulatory penalties, reputational damage and financial losses.
• Inefficiency: A lack of controls often results in duplicated efforts, wasted resources and operational delays.

Despite their importance, many accountants and CPAs lack a strong understanding of internal controls, especially those who do not specialize in audits. This gap in knowledge is a significant issue in our industry, as internal controls are essential not just for auditors but for all financial professionals.

Educating Teams on Internal Controls

One of the most overlooked aspects of internal controls is the need to educate people within the organization on why they matter. Without this understanding, teams often fail to prioritize controls, leading to a weak or ineffective system.

Internal control implementation starts with the tone at the top. Management must promote a culture of accountability, integrity and transparency. When leadership fails to emphasize the importance of controls, the entire system becomes vulnerable. However, setting the tone is not enough. Management must also:

• Design controls thoughtfully. Controls should address specific risks and be practical for the organization’s size and complexity.
• Monitor and evaluate controls periodically. As systems and processes evolve, controls must be reviewed and updated to ensure continued effectiveness.
• Enforce segregation of duties. This prevents any one individual from having too much control over critical functions. If segregation is not feasible, compensating controls should be implemented.

Bridging the Knowledge Gap

Accountants and CPAs have a responsibility to understand internal controls deeply, regardless of their specialization. This knowledge allows them to identify weaknesses, recommend improvements and educate clients on the importance of controls for long-term financial success.

To achieve this, professionals must go beyond viewing internal controls as a checklist or compliance exercise. Instead, they should understand how controls:

• Prevent and detect fraud and errors.
• Promote operational efficiency.
• Foster confidence in financial reporting.

Furthermore, organizations must ensure that employees at all levels understand their role in maintaining controls. A well-designed system is only as strong as the people executing it.

The Buy-In Process

Perhaps the most critical yet neglected step in implementing internal controls is gaining buy-in from the team. Without buy-in, even the best-designed systems will fail. Teams must understand:

• The “Why:” Explain why controls are necessary and how they protect the organization.
• The “How:” Describe how controls work and what their specific roles entail.

Organizations should invest time in educating employees and fostering a culture that values strong controls. This process may seem basic, but it is foundational for building a system that can withstand the test of time.

Internal controls are not just technical tools — they are essential safeguards that protect organizations from financial risks. Yet, their importance is often overlooked due to a lack of understanding or buy-in. As accountants and CPAs, we must advocate for internal controls not only as a best practice but as a critical component of financial systems.

By prioritizing education, fostering a culture of accountability and continuously monitoring controls, organizations can build systems that are resilient, efficient and effective. Internal controls may sometimes feel like overkill, but in those critical moments when they are needed, they make all the difference.