What is the advantage of using technology in the internal control system?
Using technology in the internal control system helps to protect businesses from fraud and secure assets. This is achieved by reducing risks, encouraging operational efficiency, and safeguarding compliance with laws and regulations. Additionally, using technology enables companies to provide their stakeholders with accurate and timely reporting. This enhances financial transparency and builds trust with stakeholders. Furthermore, robust internal control systems demonstrate a company’s commitment to governance and accountability, which can lead to long-term support. Read about How Data Governance Frameworks Drive Business Success to learn more.
The effective construction of internal control is the path and intermediate mechanism to achieve the governance objectives of enterprises, which can effectively alleviate the agency problem and information asymmetry at the operation level of innovation investment [1].
However, the research shows that the effectiveness of the internal control system has a positive effect on enterprise innovation performance, which comes from its supervision and motivation during the R&D projects, and the efficient transformation and effective utilization of the R&D results, which improves innovation output [2].
In addition, the implementation of internal controls can help prevent information leakage by making it more difficult for people to access sensitive information. By implementing segregation of duties, establishing approval hierarchies, and enforcing strict data management, you can limit the potential for misuse and reduce security risks. Furthermore, continuous control monitoring and data management services can provide real-time insight into transactions and activities, which can be used to detect anomalies or suspicious activity.
