The importance of having a good internal control system in organizations has increased in recent years, this due to the practicality of measuring efficiency and productivity when implementing them; especially if it focuses on the basic activities they carry out, since they depend on it to stay in the market. It is good to highlight that the company that applies internal controls in its operations, will lead to know the real situation of the same, that is why, the importance of having a planning that is able to verify that the controls are fulfilled to give you a better vision about its management.
Therefore, internal control includes the organization plan in all procedures coordinated in a manner consistent with business needs, to protect and safeguard your assets, verify their accuracy and reliability of accounting data, as well as bring efficiency, productivity and custody in operations to stimulate adherence to the requirements ordered by management. From the above, it follows that all the departments that make up a company are important, but there are dependencies that will always be in constant changes, in order to refine their functionality within the organization.
This being the case, it is clear that such changes can be achieved by implementing and adapting internal controls, which are capable of safeguarding and preserving the assets of a department or the company. Within this order of ideas, (Catácora, 1996: 238), expresses that internal control:
«It is the basis on which the reliability of an accounting system rests, the degree of strength will determine if there is reasonable security of the operations reflected in the financial statements. A major weakness in internal control, or an unreliable internal control system, represents a negative aspect of the accounting system. "
In the perspective that we adopt here, we can affirm that a department that does not apply adequate internal controls, may run the risk of having deviations in its operations, and of course the decisions made will not be the most appropriate for its management and could even lead to it. to an operational crisis, therefore, a series of consequences must be assumed that harm the results of its activities.
After reviewing and analyzing some concepts in relation to control, it can be said that these controls allow us to define the systematic way in which companies have seen the need to implement administrative controls in each and every one of their daily operations. Said controls must be established in order to reduce the risk of loss and foresee them in their defects.
Regardless of the application of control that you want to implement for organizational improvement, there is the possibility of unexpected situations arising. For this it is necessary to apply a preventive control, being these the ones in charge of executing the controls before the start of a process or administrative management. Additionally, there are detection controls which are executed during or after a process, the effectiveness of this type of control will depend mainly on the time interval between the execution of the process and the execution of the control. To evaluate the efficiency of any series of control procedures, it is necessary to define the objectives to be met.
Together with this, (Poch, 1992: 17), he expresses "the applied control of the management has as its goal the improvement of the results linked to the objectives." This deduces the importance of the controls and in this sense, (Leonard, 1990: 33), assures "the controls are actually a task of checking to be sure that everything is in order." It is good to highlight that if the controls are applied in an orderly and organized way, then there will be a positive interrelation between them, which would come to constitute an extremely effective control system. It should be noted that the control system tends to give security to the functions that comply with the planned expectations. It also points out the flaws that may exist in order to take measures and thus their repetition.
Once the system is operating, forecasting is required on a test basis to see if the intended controls are operating as planned. For this reason, internal control cannot function parallel to the system, since these are closely related, that is, they function as a whole, to achieve the objective established by the organization.
Entering more fully into the central issue, internal control is a whole system of financial controls used by companies, and in addition, it is established by the management so that businesses can carry out their administrative processes in a sequential and orderly manner, with the in order to protect your assets, safeguard and insure them to the extent possible, the accuracy and veracity of your accounting records; in turn serving as a frame of reference or pattern of behavior so that operations and activities in the different departments of the organization flow more easily.
Taking into account that internal control will serve as a basis or instrument of administrative control, and that it also encompasses the organization plan, procedures and annotations directed with the sole purpose of safeguarding assets and accounting reliability, the (Federation of Colleges of Public Accountants of Venezuela 1994: 310), defines it as:
«The organization plan, of all the methods and coordinated measures adopted to the business, to protect and safeguard its assets, verify the accuracy and reliability of the accounting data and its operations, promote efficiency and productivity in operations and stimulate adherence to the practices ordered for each company ».
Once the meaning of internal control is established and made clear, it is good to see it also from a financial point of view where (Holmes, 1994: 3), it defines it as: “A function of management that aims to safeguard and preserve assets of the company, avoid undue disbursement of funds and offer the assurance that obligations will not be contracted without authorization ».
Likewise, the concept of internal control issued by (Redondo, 1993: 267), is: «a study and an adequate evaluation of existing internal control should be made, as a basis to determine the breadth of the tests to which the procedures will be limited of audits ».
Taking into account the different concepts of internal control, they can be divided into two large groups: Administrative and Accounting. As for the administrative, it is the organization plan, and all the methods that facilitate the planning and control of the company (plans and budgets). With regard to the accounting officer, it can be said that it includes methods and procedures related to the authorization of transactions, such is the case of financial and accounting records.
Within this perspective (Catácora, 1996: 238), he points out that: «an internal control system is established under the premise of the concept of cost / benefit. The main postulate when establishing internal control designs control guidelines whose benefit exceeds the cost to implement them ». It is notorious to state that internal control has the mission of helping to achieve the general objectives set by the company, and this in turn to the specific goals that will undoubtedly improve the organization's management, in order to optimize administrative management.
However, on this point, it is important to point out that, for an internal control to perform its task, it must be: timely, clear, simple, agile, flexible, adaptable, effective, objective and realistic. All this taking into account that the classification of the same can be preventive or detection so that it is original. Internal accounting control represents the support on which the reliability of an accounting system rests. An internal control system is important because it is not limited only to the reliability in the presentation of the figures that are reflected in the financial statements, but also evaluates the level of operational efficiency in accounting and administrative processes.
The internal control in an entity is oriented to prevent or detect errors and irregularities, the differences between these two is the intention of the fact; the term error refers to unintentional omissions, and the term irregular refers to intentional errors. The truth is that internal controls must provide reasonable confidence that the financial statements have been prepared under a control scheme that reduces the probability of having substantial errors in them.
With respect to irregularities, the internal control system must be prepared to discover or avoid any irregularity related to falsification, fraud or collusion, and although the amounts may not be significant or relevant with respect to the financial statements, it is important that These are discovered in a timely manner, because they have implications for the proper conduct of the business.
According to (Meigs, W; Larsen, G. 1994: 49), the purpose of internal control is: "To promote the operation, to use said control in the way of moving towards the effective and efficient organization." This can be interpreted as the fulfillment of the company's objectives, which can be disturbed by errors and omissions, appearing in each of the company's daily activities, being affected by the fulfillment of the objectives established by management.
The focus of this concept is to protect assets against the situation that is considered in danger of loss, that is, if this situation often occurs, try to eliminate or minimize them, your idea is to try to promote efficiency in the management of the operations that the performance carried out by the established policies of the organization and, lastly, ensure that the internal control established results in keeping the administration informed of the operational and financial management and that said information is reliable and arrives at the most appropriate time. In order to allow management to make decisions appropriate to the real situation that the company is going through.
The deficiencies or weaknesses of the internal control system detected through the different supervision procedures must be reported so that the corresponding adjustment measures are adopted. Depending on the impact of the deficiencies, the recipients of the information may be both the people responsible for the function or activity involved and the higher authorities. The highest authority of the body must seek to elicit, disseminate, internalize and monitor the observance of accepted ethical values, which constitute a solid moral foundation for its management and operation. Such values should frame the conduct of officials and employees, guiding their integrity and personal commitment.
In conclusion, we can say that the importance that internal control is acquiring in recent times, due to numerous problems caused by its inefficiency, has made it necessary for the members of the boards of directors to assume effectively, responsibilities that until now they had been left in the hands of the companies' own organizations. That is why it is necessary for the administration to be clear about what internal control consists of so that it can act at the time of its implementation. Internal control does not have the same meaning for all people, which causes confusion among businessmen and professionals, legislators, etc. Consequently, communication problems and diversity of expectations arise, which gives rise to problems within companies.
Bibliography
Catácora, F. (1996). Accounting Systems and Procedures. First edition. McGraw / Hill Publishing. Venezuela.
Federation of Public Accountants of Venezuela. (1994). Generally accepted accounting principles. Venezuela.
Holmes, A. (1994). Principles and Procedures Audits. Editorial Limusa. Mexico.
Meigs, W. Larsen, J. (1994). Audit Principles. Second edition. Mexico. Editorial Diana.
Redondo, A. (1993). General Accounting Practice Course. Tenth Edition. Venezuelan Accounting Center Publishing House. Venezuela.
Poch, R. (1992). Internal Control Manual. Editorial Gestión 2000. Second Edition. Barcelona, Spain.
Leonard, W. (1990). Administrative audit. Method evaluation and administrative efficiency. Mexico: Editorial Diana.
Summary
Internal control is a process integrated into the processes, and not a set of heavy bureaucratic mechanisms added to them. These internal controls are carried out by the board of directors, management and other staff of an entity, in order to provide a reasonable guarantee for the achievement of objectives. Internal control is a process, that is, a means to achieve an end and not an end in itself, it is carried out by people who act at all levels, it is not just about organization manuals and procedures, it can only provide a reasonable degree of security and not total security for driving or achieving objectives. When speaking of internal control as a process, reference is made to a chain of actions extended to all activities,inherent in management and integrated into its other basic processes: planning, execution and supervision. Such actions are incorporated (not added) to the entity's infrastructure, to influence the fulfillment of its objectives and support its quality initiatives.
Key Words: Internal Control, Information System, System, Control, Globalization, Standardization of Processes, Generally Accepted Accounting Principles, Planning, Organization, Direction, Execution, Quality, Results, Time Optimization.
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