Internal controls are a set of checks and balances that provide executives with reasonable assurance that the organization’s risks have been significantly reduced and are being managed effectively. Implementing strong internal controls allows an organization to achieve their goals and objectives efficiently and economically and without the worry of what could go wrong.
Why is it important?
At the core of any well-run organization is a well-run control environment. That means your business has the right checks and balances to detect or prevent errors or fraudulent activities from occurring. It gives executives the comfort that their business is operating according to pre-defined standards. It allows them to take a step back from micro-managing transactional details and take two steps forwards towards focusing on running their operations.
Internal controls are the backbone of every cannabis organization's ability to ensure the integrity of their operations and financials.
A strong set of internal controls helps cannabis businesses detect and prevent disastrous risks such as fraud and areas of non-compliance. Cannabis businesses in particular have major internal risks surrounding inventory and cash management. Multiple internal controls processes are needed for executives to protect their business from losing money or becoming non-compliant, which can lead to massive fines and/or loss of license.
Our certified public accountants are experts in the cannabis industry and can provide you with internal audit services that add value to your organization and protect your cannabis business from disastrous consequences. Our cannabis accounting experts provide objective and relevant advice, and contribute to the effectiveness and efficiency of governance, risk management, and control processes.
Risk Assessments: Gain a competitive edge by incorporating internal (corporate strategy) and external (cannabis industry trends) insights to perform a risk assessment of your cannabis operation. We will have discussions with senior executive to better understand the risks your cannabis business faces and customize internal controls that benefit your organization.
Risk Identification: When identifying risks at the process level, we examine “what could go wrong?” within this process.
Control Understanding: Our cannabis accounting experts perform walkthroughs of the processes under scope in order to gain an end-to-end understanding of the processes or activities being reviewed through interviews with key stakeholders and review of supporting documentation. Our understanding of the process is then documented in the form of flowcharts and/or narratives, and are reflected in our Audit Work Programs. Documenting the process is critical because it identifies where controls are not sufficient to mitigate the risks that were identified and where improvements could be made.
Validate controls are operating effectively: In order to ensure that controls are operating as intended, we need to independently test a sample of transactions through inquiry, observation and/or inspection of documentation.
Identify areas of non-compliance and propose enhancements to controls: Any exceptions that were identified as part of our procedures will be formally documented and communicated to management with our recommendations to remediate the issues.