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Financial resilience - why internal control is more important than ever

Not just compliance, but good business

Often when we read about corporate failures we only pay attention to the company or industry involved. Perhaps even searched the names of the CEO’s and high-profile individuals involved or take note of those who are caught in the media crossfire.

However, we rarely seek a deeper understanding of what causes these large, messy, and unpleasant failures. More often than not - the scandals occur as a result of a weak control environment for critical functions and processes.

Without the right oversight and governance, control failures can be particularly difficult to detect but when discovered will invariably, and negatively, impact value. Dealing with the aftermath also distracts management from taking advantage of commercial opportunities to facilitate growth in the company.

Good controls do not guarantee the prevention of fraud or corporate collapse entirely, however, a robust control environment significantly reduces risks and supports sustained growth through a more trustworthy and resilient operating framework.

Today’s economic, geopolitical, social and corporate environment is highly dynamic. Wide-ranging stakeholders including investors, regulators, governments, wider society, expect higher standards of corporate and financial governance. In our experience, the execution of finite and discreet audits alone no longer satisfy stakeholders, who now expect executives and boards to prioritise a culture centred around governance in a wider sense.

Success in this environment requires agility in decision-making and a balance of empirical and subjective inputs. Enabling quick decision-making while protecting risk requires a system where controls are more than a series of forms and checkboxes. It requires clarity of the organisational risk appetite, efficiency in execution channels (processes), and a control framework that is both understood and pragmatic.

Examining past events and performances as a predictor of the future was an approach that served businesses well during a time when the rate of change was linear and when businesses, large and small, had ample time to respond to changes in their commercial environment and markets. However, tomorrow’s successful enterprise must adopt a proactive, almost anticipatory, approach to building financial resilience in its day-to-day operations.

When implemented correctly, a robust internal control environment:

  • Reduces risk – through fraud and error prevention and detection, safeguarding of company assets and ensuring compliance with laws and regulations
  • Increases financial resilience– by enabling transparency, accountability, viability and increased reliability and integrity of financial information; and
  • Optimises returns – by establishing a foundation to support growth, including easier access to markets and funding.


A strong internal control environment is particularly important in times of uncertainty, where risks arise, and the company needs to identify them quickly and respond confidently.

Today, the risks companies face continuously evolve, pulling the finance function and the existing internal control environment in multiple directions. Every change made to a business model likely requires a corresponding change to controls which is often overlooked, resulting in increased exposure to risk as a result of a disconnected finance function and internal control environment.  

Finding the balance between implementing an effective system of internal control and cost is crucial. Not having a robust control environment could cost more than you think, especially when considering the impact of loss of reputation, company assets or stakeholder value in the instance of financial error, cash leakage or other consequences of not establishing a strong internal control environment.

Shifting the focus from just compliance to improving financial resilience, is just good business. By focusing on what matters most, a company can extract the value of internal control across the business, while reducing the cost of compliance.

If you would like to learn more about implementing a robust, sustainable and practical finance function and internal control environment, please connect with us.