Volume 02 Issue 06-2022
15
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
02
I
SSUE
06
Pages:
15-21
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
METADATA
IF
–
7.356
A
BSTRACT
The article considers the requirements for the organization of control, which allows to significantly
increase the level of management of economic objects, special attention is paid to the issues of internal
control, as the most important function of the management system, as one of the conditions for the effective
functioning of economic entities. It is noted that in modern conditions, internal control is becoming one of
the most important elements of effective enterprise management, and the financial result of the
organization's activities directly depends on a properly organized management system. The article
concluded that the organization's internal control system is an important part of the enterprise
management system and business management in general, it enables the organization to prevent large
losses and achieve planned results.
K
EYWORDS
Internal control, management function, control, economics, finance, goals, objectives, efficiency,
organization, information.
Journal
Website:
http://sciencebring.co
m/index.php/ijasr
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Research Article
INTERNAL CONTROL AS ONE OF THE FUNCTIONS OF
ENTERPRISE MANAGEMENT
Submission Date:
June 02, 2022,
Accepted Date:
June 12, 2022,
Published Date:
June 24, 2022
Crossref doi:
https://doi.org/10.37547/ijasr-02-06-03
Z.A. Atabayeva
Lecturer, Department of Accounting and Audit, Fergana Polytechnic Institute, Fergana, Republic of
Uzbekistan
Volume 02 Issue 06-2022
16
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
02
I
SSUE
06
Pages:
15-21
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
METADATA
IF
–
7.356
I
NTRODUCTION
For modern economic conditions, the increasing
use of highly efficient accounting systems is
characteristic, which makes it possible to increase
the level of management of economic objects.
They successfully provide the opportunity to
collect and store information, process it quickly,
identify deviations from the intended indicators,
and analyze data. As a result, "Digital economy ...
increases the efficiency and quality of accounting,
forms modern innovative approaches to the
integration of various types of accounting" [2]. On
this basis, it becomes possible to gradually
systematically monitor the activities of all
sections and divisions of the organization, track
changes in environmental conditions, and make
appropriate adjustments promptly.
The use of advanced accounting systems creates
the prerequisites for strengthening the
centralization and efficiency of control, enhances
the impact of control on all aspects of the
production and financial activities of the
organization, and transfers control functions over
their activities to the highest level of
management. That is, "As a result of ... the use of
digital technologies, an increase in the quality of
reporting data, a reduction in the time for
preparing reports, simplified administration of
reporting indicators, and a reduction in the costs
of collecting, processing and analyzing data" [3].
Today, requirements are imposed on the
organization of control, where special attention is
paid to internal control, as the most important
function of the management system, as one of the
conditions for the effective functioning of
economic entities as a whole. Namely, "... control
of results becomes one of the main management
tools that provide top management with accurate,
complete and timely information" [4].
The development of a market economy puts
forward the task of developing such control
systems that would enable the organization to
have the information necessary for management,
predict the dynamics of changing market
conditions, analyze, evaluate and prevent the
occurrence of inefficient commercial operations,
crises of financial and economic activity, offering
the management apparatus alternative solutions
exit from them.
At any stage of the management process of an
economic entity, deviations of the actual state of
the management object from the planned one are
inevitable, timely information about the quality
and content of such deviations is achieved by the
internal control of the enterprise.
In the Republic, the requirement for internal
control is introduced by Article 21 of the Law of
the Republic of Uzbekistan “On Accounting”,
No.404dated April 13, 2016, where it is noted:
“Internal control is a system of measures
organized based on an accounting policy adopted
by the head of an accounting entity to ensure the
legality, the economic feasibility of business
operations, the safety of assets, the detection and
Volume 02 Issue 06-2022
17
International Journal of Advance Scientific Research
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2750-1396)
VOLUME
02
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Pages:
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SJIF
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(2021:
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(2022:
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METADATA
IF
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7.356
prevention of cases of theft and errors in
maintaining accounting, financial and other
reporting” [5]. At the same time, the internal
control of the committed facts of economic life is
organized and carried out by each subject of
accounting.
It follows that internal control is one of the main
functions of management, and is a system of
continuous monitoring and verification of the
organization's work in order to assess the
correctness and effectiveness of managerial
decisions, identify deviations and adverse
situations, inform management in a timely
manner to make decisions to eliminate, reduce
the risks of its activities and their management.
That is, internal control is a form of feedback,
through which violations are detected in time,
and timely management decisions are made in
order to prevent negative phenomena in the
organization's activities.
T
HE MAIN PART
Recently, the internal control of the organization
has received more and more attention. This is due
to the fact that organizations are becoming more
and more involved in global integration and
economic processes, as well as economic
institutions, and, accordingly, their activities
must meet international requirements and
standards.
The growing interest in internal control is also
due to factors such as:
1)
Internal control, there is one of the few
available
and
at
the
same
time
underestimated resources, the correct use of
which can increase the efficiency of
enterprises and organizations;
2)
Even the largest companies fail, as the
institution of external audit can cause serious
failures;
3)
The transfer of business management by the
owners of companies to professional
managers,
due
to
the
high-quality
organization of internal control;
4)
Organization of internal control in order to
streamline the business processes of
enterprises, which leads to very significant
cost savings.
In the new economic conditions, internal control
is one of the most significant factors influencing
the financial results of organizations, as well as
the current financial condition and long-term
plans for their development.
Oriented to the growth of performance, control in
one form or another exists in every organization.
The larger the organization and the more complex
its organizational structure, the broader the
requirements for the control system and the more
urgent the task of improving its quality becomes.
At the same time, market conditions determine a
fundamentally new approach to understanding
the essence and content of the control. In this
regard, the economic significance of the issues of
theory, methodology, organization of internal
control of organizations and the insufficient
development of these issues in modern business
Volume 02 Issue 06-2022
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International Journal of Advance Scientific Research
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VOLUME
02
I
SSUE
06
Pages:
15-21
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
METADATA
IF
–
7.356
conditions poses a requirement for improving
internal control methods.
To build internal control in a particular
organization, it is necessary to establish: what are
its goals; what are its main elements; What are the
principles of internal control? At the same time, it
is important to realize that it is useful only if it is
aimed at achieving specific goals, and before
evaluating the results of control, it is necessary to
determine these goals. In particular, there are five
main objectives of internal control:
1.
Reliability
and
completeness
of
information;
2.
Compliance
with
policies,
plans,
procedures, and legislation;
3.
Ensuring the safety of assets;
4.
Economical and efficient use of resources;
5.
Achievement by divisions of the company
of goals and objectives.
Based on analyzes of the sources studied, it was
established that control alone cannot solve the
tasks facing it. This requires interpenetration of
control into other management functions.
Therefore, theoretically considering each stage as
a separate element of the management process, it
can be assumed that an element of control is
present at each stage of the management process,
from which the concept of internal control can be
interpreted as one of the stages of the
management process.
In this connection, the main tasks of internal
control should be assistance to the management
of the organization in the form of control of
ensuring investment attractiveness; achieving
transparency of the financial and economic
condition of organizations for their participants
(founders), investors, creditors; creation of an
effective
mechanism
for
managing
the
organization, etc. [6-10]. Internal control,
focusing on the ratio of management and control
objectives, should ensure an increase in the
efficiency of the enterprise as a whole.¬
At the same time, the main goal of internal control
is to identify deviations of the actual state of the
managed object from the normative, planned and
many other characteristics in accordance with
which it must function, reflecting the state of
control in various reports in accordance with the
management accounting methodology, on the
basis of which optimal management decisions can
be made. Such a goal-setting makes it possible, on
the one hand, to avoid assigning various kinds of
unusual tasks to internal control, and on the other
hand, to more specifically show the general
orientation of this specific management function.
So, if taken broadly, the purpose of internal
control coincides with the purpose of all
economic activity, with the purpose of production
and management.
Achieving the goals of management is carried out
by solving problems consisting of the main
indicators of the effectiveness of the management
of the organization:
Establishment and evaluation of the actual
state of the object or its part at a given time;
Prediction of the state and behaviour of an
object or its part at a given time;
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Contribute to the achievement of the goals of
the economic organization;
Identification of unused reserves, exclusion of
illegal actions and losses;
Determination and evaluation of the results of
managerial actions.
It should be noted that the effectiveness of
internal control, and therefore the effectiveness
of management as a whole, will largely depend on
how the collection, processing, and distribution of
information is organized in order to ensure the
decision-making process. And accordingly, the
solution to these complex tasks related to
monitoring the effectiveness of the organization's
management will be facilitated by complete,
reliable and timely information prepared by
internal control units.
Consequently, the principle of organizing internal
control focused on monitoring the compliance of
the organization's activities with the adopted
course of action (targets and benchmarks) is a
specific principle of organizing control in the
modern economy. According to this principle,
internal control should ensure the unity of
decision
and
execution,
the
successful
implementation of tasks, prevent possible errors
and shortcomings and ensure compliance with
the goals of control and management goals.
Analyzing the main goals of internal control, we
can conclude that the ultimate goal of internal
control is the success of the organization, which
requires, in particular:
To ensure the effectiveness of activities;
Comply with laws and regulations;
Generate reliable reports.
In other words, the purpose of internal control
should be to ensure the legality, expediency and
efficiency of the enterprise.
In this connection, the following requirements
must be presented for the implementation of
internal control at the enterprise:
The obligation of internal control follows both
from the requirements of the legislation and
from the practice of doing business;
The continuity and frequency of internal
control are determined by the tasks assigned
to it;
The effectiveness of internal control,
determined by the tasks of doing business, is
assessed
in
accordance
with
legal
requirements and audit documents;
The rationality of internal control is fixed as a
requirement for its organization by legislative
requirements;
Documentation and reliability of internal
controls, also required by legal requirements
and audit documents.
R
ESULTS
Summarizing approaches to the definition of
internal control, we state that internal control is a
system for monitoring the process of functioning
of a managed object and checking its actual state
in order to identify deviations from managerial
decisions, evaluate the effectiveness of decisions,
Volume 02 Issue 06-2022
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International Journal of Advance Scientific Research
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VOLUME
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Pages:
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SJIF
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)
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)
METADATA
IF
–
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and identify adverse events. It follows that the
presence of an effective system of internal control
in the organization's management system will
allow:
Ensure compliance of the activities carried out
with the policy and plans of the organization,
as well as with the requirements of the
current legislation;
To increase not only the efficiency of
management of the organization and its
structural divisions, but also the effectiveness
of ongoing operations, and the efficiency of
the use of all types of resources;
Limit the risks inherent in the activities of the
organization;
To prevent the formation of errors in the
reflection of business transactions or their
detection, and, accordingly, to improve the
quality of both accounting and management
reporting.
To
prevent
deviations
of
business
development from the given direction and
participate in the process of making
managerial
decisions
"in
real-time",
considering each stage as a separate element
of the management process, while the element
of control is present at each of its stages;
Ensure the safety of property, identify and
mobilize existing reserves in the field of
production and finance, and create conditions
for increasing the efficiency of the economic
activity of the organization;
In order to maintain the safe functioning of the
organization, clearly check the correctness of
accounting and tax accounting, as well as the
timeliness and correctness of the preparation
of accounting (financial), tax, statistical and
other reports [4, 11].
C
ONCLUSION
In conclusion, it can be concluded that the
internal control system of the organization is a
very important part of the enterprise
management system and business management
as a whole. Control gives the organization the
opportunity to prevent large losses and achieve
the planned results. It will allow you to identify
existing problems as soon as possible, prevent
and eliminate them in a short time. This will
undoubtedly contribute to increasing the profit of
the organization, increasing its manageability and
stability.
Thus, the creation of an internal control system is
the need to reflect the interests of the economic
security of the enterprise and the effective work
of all its divisions, and the improvement of the
functioning of the enterprise depends on the
effectiveness of the organization of the internal
control system. With its help, violations will be
detected in a timely manner and, accordingly, in
order to prevent negative phenomena in the
organization's
activities,
the
necessary
management decisions will be made on them. The
absence of control in the organization, regardless
of its type and direction of activity, slows down
the process of its development or completely
suspends it.
R
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