Internal Control
Definition
An internal control is a process or rule that reduces risk in the business. Controls can prevent problems (like requiring approval before a payment) or detect them (like a bank reconciliation).
Example
A business requires two approvals before any payment over $500 is sent. This control prevents one person from sending a large payment without anyone else knowing.
Why It Matters
Controls do not guarantee nothing will go wrong, but they make problems less likely and easier to catch.