“Effective internal controls are good for business.”
Coso.org
Did you know that organizations lose an estimated 5% of their annual revenues to fraud? Or that global fraud losses reach $3.5 trillion each year, with the average scheme going 18 months before detection? These statistics, reported by the Association of Certified Fraud Examiners (ACFE), highlight a reality many organizations underestimate.
What can an organization do to protect itself? Implementing strong internal controls is one of the most effective ways to reduce fraud risk and safeguard operations.
So, what are internal controls? Investopedia defines it this way: “Internal controls are processes and procedures implemented by a company to ensure accuracy, prevent fraud, and improve efficiency in financial and operational activities.”
Internal control is essential to operational effectiveness, organizational reliability, and long‑term sustainability. Without it, organizations become far more vulnerable to:
- Theft or misuse of company assets
- Compromise of sensitive customer information
- Costly errors and operational inefficiencies
- Fraudulent activity that may go undetected for months—or years
- Negatively impacting the organization’s reputation
At Aldridge Kerr, we routinely uncover risks within organizations that could lead to significant financial and reputational loss if left unaddressed. Unfortunately, many organizations wait until after a loss occurs to recognize the need for internal controls.
Proactive internal control isn’t just a safeguard—it’s a strategic advantage. Establishing the right controls today can prevent tomorrow’s crisis and strengthen the foundation of your organization’s success. Here are measures every organization should take to mitigate fraud exposure through effective internal controls:
- Segregation of duties — No single employee should control an entire transaction from start to finish.
- Authorization and approval workflows — Require documented approval for spending, access, and changes.
- Reconciliations and reviews — Regularly compare records (bank statements, inventory, vendor lists) to detect anomalies.
- Access controls — Limit system and data access to only what each role requires.
Aldridge Kerr can help your organization identify and mitigate your risk exposures.