Internal controls spending set to increase

Research by
Ernst
& Young into the internal control and compliance strategies of 140
companies has revealed that the vast majority still plan to spend heavily in
this area over the next 12 to 24 months.

Almost 90% of respondents said that investments in internal controls deliver
business benefits by enhancing processes, 86% said it provides for a better
understanding of major risk areas, while half said that it had a positive impact
on investor confidence.

“A business’s internal control efforts are about much more than compliance,”
the E&Y report, From Compliance to Competitive Edge: New thinking on
internal control, claims. “When implemented and working effectively, they
improve information reliability, improving decision making and driving
competitive advantage. Yet controls seem to have gained a bad name for
themselves as a burden – to budgets and management time – and are associated
with unnecessary cost and inefficiency.”

Areas where companies feel that controls need to be strengthened include
expanding into new international markets (59%); post-acquisition integration
(58%); real estate and construction projects (55%); and IT implementations and
upgrades (51%).