The impact of the internal control system on the quality of financial reports

The internal control of companies and the correct financial reports are the backbone of the company, and for this clearly shows the impact of the internal control system on the quality of financial reports, which in turn is reflected on the various entities of the company, and the ability of the company's managers to make decisions, but how does this effect take a place within the company? this is what we will know in the following article.

Internal control is the body entrusted with setting laws and red lines for managers and employees within the company, and exposes anyone who infringes on them to punishment in accordance with the company's regulations, and internal control monitors the progress of work within the company, and supervises many tasks within the institution, such as recruitment, budget, and others.

The impact of the internal control system on the quality of financial reports does not come from a vacuum, especially since the internal control system prevents in various ways the manipulation of the company's budget and financial reports, and the internal control bodies are as follows:

· Boards of directors and executive departments with supervisory powers in private companies.

· Anti-corruption committees, which reveals cases of manipulation and corruption within the company.

· Committees of the Personnel Bureau, which oversees the role and efficiency of employees within the organization.

In addition to setting laws that ensure the proper functioning of the company, and that none of its internal elements deviate from the company's path, internal control performs several other functions, which can be summarized as follows:

1. Internal control shall establish ethical and behavioural controls and laws to impose discipline within the organization.

2. Constantly monitor the work steps to ensure that the company is moving in the right way.

3. Internal control applies transparency, justice and equality among the members of the company in its various departments.

4. Reducing the authority of some internal authorities and departments that can manipulate financial reports, and steal between the company's data and reports.

5. Ensure the validity of financial reports, and here appears the impact of the internal control system on the quality of financial reports.

The internal control officer submits the internal audit report to the company's management, in order to identify the negatives, positives and problems that the company suffers from, and to think about solutions to get rid of them, and these reports are divided into several types, perhaps the most important of which is the report on the impact of the internal control system on the quality of financial reports, and the rest of the types are as follows:

The clean report states that the company's financial position is largely stable, and does not need any adjustments or improvements to improve the company's financial position.

The auditor issues this report to clarify the policies followed by the management regarding the financial situation of the company, and to indicate that it violated the standards and principles set by the accounting department to achieve the expected financial gains, and at the same time, the report does not mention any devious policies or fraud that took place within the organization.

The auditor issues this type of report with the aim of disclaiming his responsibility for the company's financial reports, and this is in the event that the company prevents him from expressing his opinion or observations about those reports, or there are many problems in the financial records, and the company's management is unable to respond to the auditor's inquiries and questions.

The impact of the internal control system on the quality of financial reports appears in this type of report, as the auditor issues it as a result of irregularities in the company's financial statements, and some parties manipulate, fraud and deviation from the company's policy that I specified previously.

Financial reporting is the tool used to communicate financial data and information to the administrative authorities within the company, to determine its financial situation, and to determine the policies and procedures that will fix the financial conditions if they are not well.

Financial reports serve a set of objectives of the institution, and strive to achieve them, and these objectives are as follows:

1. Financial reports assess the financial position of the company, track the progress of funds continuously, and encourage investors to invest their money in the company.

2. The company's financial reports avoid tax problems, by making sure that the tax authority pays all the company's tax dues.

3. Financial reports follow up the company's financial performance and help chairmen and managers make appropriate decisions.

4. Manage debt successfully, sound financial reporting helps regulate debt, by developing a detailed plan for how to manage it.

5. Reduce administrative errors within the company, avoid legal problems and several damages, and will affect the entire functioning of the institution.

Financial reports vary according to their types and purpose, and the most common types of financial reports are as follows:

· External financial statements.

· Financial information published on the company's website.

· Annual and quarterly reports.

· Financial reports delivered to government entities.

Financial reports vary according to their types and purpose, and the most common types of financial reports are as follows:

· External financial statements.

· Financial information published on the company's website.

· Annual and quarterly reports.

· Financial reports delivered to government entities.

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