What is the purpose of internal controls?

The purpose of internal controls is primarily to safeguard assets and ensure accurate financial reporting. Internal controls are systematic measures, such as audits, checks and balances, and procedures that organizations implement to protect their resources from loss or unauthorized access. They help in maintaining the integrity of financial information, which is crucial for making informed business decisions and for complying with regulations. By having effective internal controls in place, a company can prevent fraud, detect errors, and ensure that its financial statements are reliable and reflect a true picture of the organization's financial status.

While enhancing employee efficiency, increasing sales, and improving marketing strategies can be important business goals, these are not the fundamental purpose of internal controls. Internal controls primarily focus on risk management and integrity in financial processes, thereby playing a critical role in the overall governance of the organization.