Page 227 - F1 - AB Integrated Workbook STUDENT 2018-19

Financial systems and procedures

The purpose of organisational control

7.1 The purpose of organisational control

Control within the organisation has several purposes:

Purpose Why this is important

Safeguard company’s If assets are stolen or damaged the company will
assets have to spend money to replace them

Efficiency Inefficient business practices are a waste of the
company’s money

Prevent fraud Fraud means the loss of valuable resources
belonging to the company/ shareholders

Prevent errors Errors can lead to losses in efficiency (time spent
correcting) or a loss of assets (e.g. failing to invoice
the correct amount, paying for goods which have
not been received)

This ties in with corporate governance. The directors are required to
introduce a good system of controls to safeguard the company’s assets
and protect the shareholders’ investments.

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