Strengthening internal control systems safeguards your business

THIS(Part 14 of a 24-part weekly series)

week we are discussing Internal Controls. Internal control is the process by which management structures an organisation’s activities to provide assurance that an entity operates effectively and efficiently and complies with applicable laws and regulations. It follows that an organisation should then have preventive, detective and corrective controls in place if it is to operate efficiently in this economic environment.

However, most organisations in Zimbabwe find themselves reacting to an adverse event and implementing corrective controls only. Let’s face it, corrective measures are expensive, difficult and stressful to action.

Imagine having to look for a burglary or fire alarm system because you had a nasty burglary or a fire at your workplace, you lost expensive equipment and possibly lives were lost as well. Look at the same scenario in the context of an organisation that had preventive and detective controls in place, it is highly likely that they are able to minimise this risk.

Noting the advantages of having preventive, detective and corrective controls we are going to discuss one of the ways that organisations can implement these controls. The Review and Documentation of Organisation’s Systems, Processes, Policies and Procedure Manuals is one of the most critical controls that every organisation should have. In its work over the years, Genesis Global Finance has realised that organisations have routine business processes that are key to their operations but these processes and procedures are in most cases not documented or do not cover all aspects as required by industry best practice, regulatory authorities or statutory requirements.

Organisations that do not have Policies and Procedure Manuals or do not regularly review them are likely to face serious challenges, such as: ◆ Unnecessary loss of both capital and human

assets; ◆ No guidelines on acceptable workplace

behaviour and organisational culture; ◆ No clear communication to employees; ◆ Bad organisational culture; ◆ Work and product inconsistencies and work

related errors; ◆ Prone to legal action and fraud; and ◆ No uniformity; Having well-crafted policies and procedures will ensure the following: ◆ Employees know what is expected of them with respect to standards of behaviour and performance; Set rules and guidelines for decision-making in routine situations so that employees and managers do not need to continually ask senior managers what to do; ◆ Help to adopt a consistent and clear response across the organisation to continually refer to situations involving employee interaction; ◆ Allow organisations to demonstrate good faith that employees will be treated fairly and equally; ◆ Allow organisations to have an accepted method of dealing with complaints and misunderstandings in place to help avoid favouritism; ◆ Set a framework for delegation of decision-making; ◆ Give a means of communicating information to new employees; and ◆ Offer organisations protection from breaches of employment legislation, such as equal opportunity laws Policies and procedure manuals fall into these major categories: ◆ Workplace Safety Policies such as Safety,

Health and Environment; Disciplinary Policies such as Client Service Charter, Industrial Relations; Device Use Policies such as Motor Vehicle Allocation and Use, Cellphone Use; Work Hours and Turnaround Time such as Performance Management, Remuneration and Rewards; and Sector Specific Policies such as Late Payment, Returns/Refunds, Credit Management. The above listed consequences or repercussions can be avoided by having a regular review of your current policies and procedure manuals, so that they are always in line with your industry best practice, regulatory and statutory requirements.

To those companies that do not have documented policies and procedure manuals, it is time to switch from the auto pilot mode, the mode that assumes that employees know what is required and expected of them, a mode that says we will deal with the challenges as they happen, a mode that says why spend money now when I can avoid it by just telling my employees what is expected of them, a mode that assumes nothing bad will ever happen in this organization, a mode that says no to having documented policies and procedure manuals.

This article was compiled by Juliet Zvafadza Chipunza, a transformational strategist and resource mobilisation consultant at GENESIS GLOBAL FINANCE. The contents herein are for information purposes only, and GGF does not accept responsibility for any loss arising from the use of materials or opinions contained in this article. To contact Genesis Global Finance: Call us on: +2638644131515 or +263777352828; Like us facebook: genesisglobalfinance/privatelimited Follow us on Twitter: @ggfafrica LinkedIn: /in/genesis-global-finance-166908a3/