Individual control strength – Effectiveness (is the control actually doing what it is supposed to do?) The control strength can then be determined by multiplying the three metrics together, using the below equation: Control strength = Relevance x Implementation x Effectiveness.
A control weakness is a failure in the implementation or effectiveness of internal controls. Malicious actors can leverage internal control weakness to circumvent even the most robust security measures.
Strengths of Internal Control
Operates effectively and efficiently. Protects tangible and intangible resources from waste and theft. Prevents fraud. Proactively identifies potential issues and reactively deals with them quickly when they occur. Generates prompt and accurate reporting.
Determining whether a particular internal control system is effective is a judgement resulting from an assessment of whether the five components - Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring - are present and functioning.
The four levers of control are belief, boundary, diagnostic and interactive. Most studies of management control systems have focused on interactive and diagnostic control systems [4, 8–11].
A good control system must be able to deal with every deviation as per its seriousness. No organization can afford to accord equal importance to each and every problem. This is basically the whole aim of strategic control points.
Directive is shown as being the weakest form of control; preventative is shown as the strongest form of control.
Two Levels of Control: Strategic and Operational.
Traditional Types of Control Techniques in Management. Budgetary Control. Standard Costing. Financial Ratio Analysis. Internal Audit.
Measuring the strength of individual controls is simple enough – it involves measuring a control's: – Relevance (how capable is it of theoretically stopping the threat?) – Implementation (has the control been put in place?) – Effectiveness (is the control actually doing what it is supposed to do?)
An example of internal strengths could be an organization's solid financial base, a well-educated workforce, or high-tech equipment. All of these are great examples of organizational strengths. Upper management should always be forward-thinking and set goals that exploit the organization's strengths.
The constitution of a closed-loop control system is discussed in chapter 1; the basic system is defined in terms of three elements, the error detector, the controller and the output element.
There are two basic categories of internal controls – preventive and detective.
The basic control process, wherever it is found and whatever it is found and whatever it controls, involves three steps: (1) establishing standards. (2) measuring performance against these standards. and (3) correcting deviations from standards and plans. 1.
There is a subtle difference between Power and Control. We can have power without control, but control usually creates power.
Eliminating the hazard and the risk it creates is the most effective control measure.
Control has two basic purposes namely (i) to facilitate coordination, and (ii) to help in planning. A good control system provides timely information to the management which is very much useful for taking various actions for the efficient operation of the organizational processes.
The desire for control may be rooted in a fear of uncertainty. Sometimes, it can also be related to a mental health condition. Being in control of your life sounds like a positive thing, and in most cases, it can be. But for some people, the need to control everything can become all-consuming.
That is, the more in control we feel, the more efficacious we feel about achieving the outcomes we desire, and this sense of competence boosts well-being. Control also feels good because it makes us believe that we aren't under someone else's control.