Citigroup's Internal Controls

Critique Citigroup's Internal Controls
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Critique Citigroup's Internal Controls
Internal controls are the mechanisms and procedures developed in a company to ensure integrity in all internal accounting procedures. The main purposes of implementing internal controls are to avoid fraud that could lead to the collapse of a company. Internal controls protect a company from fraudulent activities that customers and insiders could conduct. Some fraudulent activities that could happen include overpricing, overpaying, and undercharging or overcharging for services provided. According to Henk (2020), the main purpose of internal controls is not to prevent losses but to ensure early detection of fraud and to reduce risks that could lead to losses.
Operation and Design Control Deficiencies
According to AIPCA (2017), operation control deficiency is a weakness that results from human errors. In most cases, operation control deficiency could result from ignorance or intentions to defraud a company through inappropriate practices. Operational control deficiency occurs when employees fail to adhere to the ethics code and end up operating in ways that are not in line with the policies. In most cases, employees might tamper with systems that could detect such mistakes to ensure there are no recorded incidents of errors. Such deficiencies become costly to organizations because they affect the overall outcome and are not easily noticeable from the record statements.
Consequently, design control deficiency occurs due to faulty systems that do not allow straightforward operations (AIPCA, 2017). For instance, there might be systems that do not allow employees to rectify mistakes due to human error. If the mistakes are uncorrected, they result in more detrimental impacts to the company, yet there could be a solution by correcting the mistakes. Other systems might deny employees the chance to detect and prevent misstatements before the process advances.
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