Financial Control
Financial control is the process of managing and reviewing financial resources to ensure that they are used effectively, legally, and in accordance with established objectives. It aims to promote transparency, reduce waste, and combat corruption by ensuring compliance with financial policies and laws.
Financial Control Objectives:
Ensuring economic efficiency:
Ensuring maximum utilization of available resources.
Enhancing transparency:
Detecting any suspicious or illegal financial activities.
Ensuring compliance:
Ensuring that institutions adhere to financial laws and regulations.
Maintaining financial stability:
Reducing financial risks and achieving balance in budgets.
The importance of financial control:
Anti-corruption
Detect and stop illegal financial activities.
Boost confidence
Building trust between institutions and stakeholders (e.g. investors and citizens)
Improve financial performance
Reduce costs and improve cash management efficiency.
Types of financial control:
It is practiced within the organization through mechanisms and procedures such as periodic reviews.
They are carried out by independent or governmental regulatory bodies, such as national audit bodies.
Focuses on examining financial activities before they are carried out to ensure their legality.
It involves reviewing and evaluating financial transactions after they occur.
Practical examples:
- Monitor government spending to ensure funds are directed to designated projects.
- Verify compliance with corporate tax laws.
- Review budgets and accounting processes to ensure accuracy.