The latest internal control challenges include skilled staff shortage, technological advances, and the lack of executive emphasis, according to a recent report by ACCA, the Internal Audit Foundation (IIA), and Institute of Management Accountants (IMA).
The three professional bodies joined forces to poll some 2,000 of their global members to better understand internal control challenges facing organisations, ACCA said.
Internal control is defined as a core part of business operational management that achieves important objectives, improves performance, and builds reputation, especially in disruptive and uncertain times as entities continue to transform using data and technology as drivers, according to the three organisations.
The survey findings show that the continued effects of the pandemic, the turbulent economic climate, regulation, and data and technology are all presenting organisations with unique challenges for their internal control activities, ACCA added.
- The lack of appropriately skilled staff was highlighted by 50% of respondents as one of the internal control challenges, and 41% said technological advances are compromising existing internal controls. Nearly a third (32%) said a lack of executive emphasis on internal controls was also impacting the management of the issue.
- Respondents were also asked the purpose of internal control in an entity, with 88% saying it minimises risk, 84% cited prevention of fraud, and 77%, the protection of assets.
- The poll also shows that most respondents - 80% - say they agree or strongly agree that they need to apply their internal control framework to non-financial and ESG reporting.
Internal control forms a core part of the activities of accountancy, finance and internal audit professionals, assisting them to ensure that entities operate effectively and efficiently, said Helen Brand, chief executive of ACCA.
Yet the business model is changing for many because of various and interconnected external pressures,” Brand pointed out.
“Given this ongoing turbulence, it’s therefore essential that organisations recruit and retain the skilled people who can ensure that internal controls are agile and future-ready to support business transformation and growth,” she advised.