Treating an organization's internal control as a list to be ticked off just creates more administration without any real impact. Instead, achieving added value is about transforming ways of working. Internal control and compliance should become a natural part of everyday life - rather than just another long checklist. Here's how to turn your work around and streamline your internal controls.
1. Leave the checklists behind - focus on meaningfulness
The first step to making internal control more integrated and meaningful in your organization is to change your perspective. Let go of the question "What more do we need to do?" and instead start from "How do we work today?" to learn what you are already doing right, not what actions you need to add to the checklist. With a structured process and a qualified internal control system, you gain both ownership and traceability, while achieving compliance by shaping routine ways of working.
Reading tip: How to create a meaningful internal control
2. shape a supportive culture and control environment
Creating an internal control plan that focuses on the 'how' rather than the 'what' requires a supportive environment where it is clear to everyone how they should work. This often needs to be embedded in the organizational culture, which in itself can be a challenge to create and maintain. Just as it is management's responsibility to maintain the culture, it is their responsibility to support the control environment continuously. At the same time, you need a thorough understanding of what controls exist in the organization, and define them effectively.
3. distinguish between explicit and implicit risk - and manage them accordingly
One way to define the controls is to think in terms of explicit and implicit risk. Explicit risk often needs active attention and continuous monitoring, while implicit risk can be handled routinely in both day-to-day work and follow-up. An example of an explicit risk is compliance with new laws and regulations, which requires active monitoring and quick response to promptly adapt processes and avoid fines and legal penalties. An implicit risk could be technological obsolescence, where the company may gradually become less competitive if it does not continuously monitor the market, follow trends and update its systems.
The aim is therefore to integrate many of the implicit risks into your workflows, which then become part of the internal control plan
The goal is to integrate large parts of the implicit risks into your workflows, which then become part of the internal control plan - and manage the active risks through the separate risk management plan. This shifts the focus even further from the checklist.
4. map control needs through a work instruction process
To get an overview of the control needs, both the explicit and implicit risks, you need to perform a risk analysis. In simple terms, you start with the external and internal requirements that affect your business and create policies and procedures based on these. Many people are tempted to create endless lists of requirements and rules to follow, both out of a fear of failure - but above all to be able to prove that you are "doing the right thing". Unfortunately, this often hinders rather than helps compliance, creating a false sense of security instead of using common sense.
By setting out concrete work instructions, you can reduce administration - and keep your sanity. In our guide How to streamline your organization's internal controls, you'll find examples of how the process can work - from identifying requirements to defining routine controls and translating them into working procedures.
5. monitor and review internal controls continuously
As with all risk management, internal control requires continuous review and follow-up, which is easier to maintain when you have a structured process in place. At the same time, to remain relevant, you need to ensure that you have a functioning governance model, with owners monitoring external changes that may affect your working practices, and how processes should be changed accordingly. At the same time, controls need to be evaluated, tested and monitored, and your policies and procedures reviewed and adjusted over time to ensure you are actually doing things the right way.
Reading tip: How to choose the right internal control system
By following these five steps, you will be better able to integrate your controls and risk management into your daily operations - instead of adding things to long checklists. At the same time, you will be able to track compliance with procedures more easily, thus ensuring that your organization is in compliance with the requirements placed on you.
