© D.L. Crumbley
The Costs and Benefits of Internal Controls
Reliable financial reporting adds value and also can offset risks in a manner that is cost-beneficial to a company.Evaluating a company’s internal control over financial reporting is sometimes costly, but also has many far-reaching benefits.
Some of the benefits of a company developing, maintaining, and improving its system of internal controls include identification cost-effective procedures, reducing costs of processing accounting information, increasing productivity of the company’s financial function, and simplifying financial control systems.
The primary benefit, however, is to provide the company, its management, its board and audit committee, and its owners, and other stakeholders with a reasonable basis to rely on the company’s financial reporting.
Source: PCAOB Briefing Paper, Proposed Auditing Standards, October 7, 2003.