Arnon Dror is one of the most successful businessmen in the global business world. This MBA graduate has held many important posts in prominent international companies. The most prestigious being the office of Vice-President. These organizations include Xerox, Creo Inc., Scitex, Kodak Creo Americas, and Presstek. His colleagues say he believes in a hands-on approach to his work. This is attitude sets him apart from his peers. They admit his track-record in the area of corporate reconstruction is impressive and praiseworthy. Many of them even regard him to be an expert in diverse fields. These include international taxations, cash flow management, internal control, ERP integration, corporate mergers, and IT systems.
Arnon Dror – Is internal controls really necessary for entrepreneurs?
This financial expert says entrepreneurs spend most of the time and money operating their businesses successfully. Only then can they accumulate their assets and income over time. The last thing they’ll tolerate is the misuse of their fortunes by their employees. Fortunately, these businessmen can avoid this situation by implementing a mechanism which protects their financial data. This is where the concept of internal controls comes into the picture. It refers to certain measures these businessmen take to ensure proper reporting of their accounting information. The process gives them a clear idea of how money is flowing into and out of their establishment. This makes it easier for them to identify any discrepancies. Many states in America make it mandatory for companies to install such safeguards.
He further explains entrepreneurs need to understand an important fact. Implementing proper internals controls is not just for large corporate enterprises. They also need such safeguards for their businesses. Only then can they protect their assets and income. He points out the following 2 important reasons why they have to take such a step:
- Eliminates the risks of frauds and embezzlements
Entrepreneurs operating small businesses do go out of their way to employ trustworthy people. However, they can never be certain when such individuals become corrupt. Changes in their circumstances may force them to use unethical means to earn their livelihood.
Moreover, unlimited access to funds without being accountable for their actions tempt them to commit frauds. Having a system of adequate checks and balances discourages them from indulging in such activities. This is why it is necessary for small businessmen to execute a system of internal controls. They need to ensure all their staff members adhere to such measures.
- Minimizes inadvertent human errors
Businessmen are aware that their employees do make inadvertent errors while discharging their responsibilities. Such mistakes are unintentional and arise due to a variety of reasons. However, such financial discrepancies increase these proprietors’ costs unnecessarily. In many cases, the reputation of the concerns of these owners is open to question. This is an avoidable loss. Implement internal controls in the form of proper employee training can prevent such situation from arising.
Arnon Dror states entrepreneurs operating small businesses need to realize internal controls is a necessity for them. The above 2 important reasons to execute such measures prove this point without any doubt. They won’t regret taking this decision.
