Internal Controls

Internal controls over financial reporting play a critical role in management's ability to meet its objectives, effectively manage the organization and secure investor confidence. Evidence has shown that effective internal controls are not likely to exist in an environment void of managerial standards, organizational structure, sufficient accounting staffing, and financial reporting competence and authority at various levels of the organization. The importance of internal controls over the accounts receivable function, specifically credit policy and bad debt decision making, has risen in recent years. This section will cover how companies are effectively, and not-so-effectively, using internal controls to enhance integrity, profitability and long-term growth.